It is a known fact that there are many people on Facebook. In fact recently, there are almost around one billion users on Facebook. However, just because there are a lot of people on Facebook does that mean that it is an effective place for advertising? This is a question that is important to many companies. There was a study done in May 2012 about the click through rate (CTR) of ads on Facebook. According to this website http://www.marketwire.com/press-release/does-facebook-advertising-work-1658078.htm, the average CTR of an ad on Google is 0.4% which is almost 10 times higher then the CTR of Facebook which is around 0.05%. In addition to CTR, Google advertising offers many more formats then Facebook. General Motors also had an article on Forbes in May 2012 saying that Facebook Advertising doesn’t work and they are withdrawing large amounts of money. In addition to all of this Facebook stocks have been steadily dropping ever since their Initial Public Offering (IPO). One reason for this is that companies are starting to question the effectiveness of Facebook advertising.
I think that Facebook is a place where people log on to be updated with whats going on with people in their network as well as interact with close friends. This is Facebook’s primary service to public users. A lot of users on Facebook don’t view the ads as their objective while being on Facebook is usually not to purchase things. If they wanted to purchase items, they would go on Amazon or Craigslist. The fundamental difference is that people will go to Google, if they are looking for something. In particular Amazon or Craigslist if they are looking to buy something. Users on Facebook are there for another reason, which is why Facebook advertisement might not be very effective.