Why Agencies Are Failing at Facebook

Facebook has reinvented the ad ecosystem around social ad units, social targeting and word-of-mouth marketing at scale. But the monetization of Facebook, although significant, has been slow to grow for the simple fact that many advertisers don’t fully understand how to effectively navigate Facebook or understand the metrics of success on Facebook. Advertisers quickly realize that they can’t just substitute their digital ad spend on Facebook and that they can’t just add Facebook as another marketing channel in the media plan due to the different ad units, targeting parameters, frequency of page views to uniques within the Facebook ecosystem.

The bigger challenge lies in that agencies and holding companies are not suitably designed to facilitate social buying — ad units are different from display; to be successful on Facebook, you need tight integration of creative, media and public relations — but this hardly ever happens with the current agency structure where in most cases media buying and creative are siloed between agencies.

Furthermore, the metrics of success look different, so agencies more often than not don’t fully realize what success on Facebook is supposed to look like. They are weighed down by conversions and clicks, not social sharing, people talking about this or word-of-mouth marketing as metrics of success.

To truly be successful with Facebook, agencies and brands need to embrace Facebook holistically within their organization across every department and push their business to be more social by design. Social by design requires strategy to be more closely focused around a marketing platform like Facebook whose foundation is word-of-mouth marketing at scale. Brands can’t think of Facebook as “the salt on the fries” or just “icing on the cake.” Agencies and brands need to embrace social from their core and position their whole company to leverage the power of the social graph from customer service to merchandising to research and development.

There are far too many agency trading desks, holding companies and brands that are not effectively set up either to execute these buys or to understand the metrics of success; hence, money has been slow to flow to Facebook. Advertising spend on Facebook is disproportionate to the relative engagement and reach Facebook provides.

The challenge is that agency trading desks, holding companies and brands are not appropriately set up for this new medium. They are typically designed around TV buying and, to a lesser extent, standard-display-ad buying, and social advertising is not something that they are designed or set up to embrace. As a result, Facebook is severely under-monetized relative to the traffic and engagement the site has due to the fact that the agency dollars are not flowing as fast as Facebook would like.

Facebook media buying is different. The metrics of success are different. Agencies need to be aligned with this “social by design” methodology to better help brands become more social to better match the time and engagement to the amount of spend.

The key is that entire organizations from the CEO and CMO down needs to embrace and own social. Social needs to be at the heart and soul of the organization. You need to understand how to have conversations with your community, how to tap your community for product research and understand what is resonating so that consumers share elements of your brand with their friends. But Facebook needs to help brands navigate their social ecosystem if they want to sustain revenue growth. Facebook needs to make the platform more simple and intuitive and integrated around pages, ads and insights, and they need to do an better job on education and helping people understand how to navigate the social ecosystem more effectively.

Bottom line: Agencies, trading desks and brands need help in understanding how to spend on Facebook and what the metrics of success are so they can justify scaling spend.

Rob Jewell is the CEO of Spruce Media, a Facebook advertising specialist.