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Facebook may be targeting more traditional big brand advertisers than it is small business advertisers (who need ads to convert to sales in a much tighter window). e.g., the Coca-Cola commercial you see on TV probably doesn't make a single person get up out of his chair, go grab his car keys, and drive to the store and buy a Coke. Yet, over time, get exposed to enough of those ads, and when it's time to buy, your hand instinctively goes for the one your brain is bombarded with ads for all day.

Then again, Facebook ads give advertisers much less of an "in your face, brainwashing you against your will" impact than TV commercials do.

This might just be a case of a revenue model that simply doesn't fit the platform. It may be that Facebook is going to have to figure out another way to justify its high P/E ratio.




>> the Coca-Cola commercial you see on TV probably doesn't make a single person get up out of his chair, go grab his car keys, and drive to the store and buy a Coke.

>> Yet, over time, get exposed to enough of those ads, and when it's time to buy, your hand instinctively goes for the one your brain is bombarded with ads for all day.

I don't really think that has anything to do with it. At work we having both Coke and Pepsi vending machines. Most people prefer the taste of one or the other, to the point where if a place only serves Coke and they prefer Pepsi, they won't order it. Not unlike beer in America (Bud Light vs Miller Lite, etc)

Soft drink choices come down to availability most of the time. Chances are if you are at an event such as a sports game or concert, they've already made the choice for you. Same goes for a restaurant, McDonald's has Coke and Taco Bell has Pepsi.


> I don't really think [brand advertising] has anything to do with it. [...] Soft drink choices come down to availability most of the time.

Coca Coca spends about $3 billion a year on advertising. [1] I couldn't find a breakdown for how much is brand-building versus other goals, but I think we can agree it's a lot.

That suggests two hypotheses: A) People in charge of a $3 billion budget for an incredibly profitable and long-lived company know what they're doing, or B) An anonymous non-expert on the Internet has correctly realized that advertisers are just fooling themselves, and he (and everybody else) is above being manipulated by brand advertising.

No offense, but I'm going with A.

[1] http://www.ajc.com/news/business/coca-cola-spent-more-than-2...


I'm going to go with B. Just because "everyone is doing it" doesn't mean they know what they're doing. Coke spends a ton of money on advertising because they want more sales and common wisdom says the way to get more sales is to spend a ton of money on advertising. It might work, it might not, but it isn't a simple 1 to 1 thing and it works differently on different people.

On a personal note, I grew up drinking Coke (because my dad preferred it), and I generally prefer the taste of Coke most likely because it's what I grew up drinking. I've seen Coke ads, and I've seen Pepsi ads, and neither one makes me want to drink one or the other or go buy one or the other. About the only thing it might do is influence me to go get a Coke if I was already feeling a bit thirsty although even if it was a Pepsi ad it would probably still make me want to get a Coke. In this case it would be a win for Soda vs. some other kind of drink like say a Starbucks coffee, not specifically Coke vs. Pepsi.


There was a really great discussion on Reddit (of all places) about the purposes and results of advertising. One of the things someone brought up was that a lot of times, ads are there to reinforce your existing preferences and purchasing decisions, and not to influence your making of them.

Post: http://www.reddit.com/r/explainlikeimfive/comments/14y695/el...

See the first reply to the first post:

> Holy fuck. You're right. I bought a car recently, and while the TV spots had nothing to do with my decision, now when I see them, I sing along with the song and cheer at the TV and shit.

It turns people who bought your product in to people who are fans of your product, which makes them more likely to become repeat purchasers (and less likely to seriously consider other brands when it's time to purchase).


Completely off topic, but reading this ^^ has made me go and grab a Coke from the office fridge. Can't say I wasn't thirsty but can say seeing the word Coke several times above did have an effect.


Related to A - there's an old quote from John Wanamaker, father of advertising: "Half the money I spend on advertising is wasted; the trouble is I don't know which half." It may not be clear to anyone (even Coke themselves) whether facebook advertising, or any other channel, is effective; they just know their total efforts are working very well.


I'm not so sure, at least on the beer front. I grew up in St. Louis, home of Budweiser. Everything in the city is named after one of the members or former members of the city, and just about every event in the city is sponsored by Anheuser-Busch (owner of Budweiser). I have since left the city, but if I'm looking for cheap, crappy beer that's available at any bar, I reach for a Bud-something-or-other.


Sorry, I feel compelled by the Holy Spirit of drinkability:

This is the famous Budweiser beer. We know of no brand produced by any other brewer which costs so much to brew and age. Our exclusive Beechwood Aging produces a taste, a smoothness, and a drinkability you will find in no other beer at any price. Brewed by our original all natural process using the choicest Hops, Rice and Best Barley Malt.


What? Is this a plug for Budweiser? They are a terrible beer that is getting more terrible.

www.businessweek.com/articles/2012-10-25/the-plot-to-destroy-americas-beer


It's the message printed on the label on every bottle.

Read it carefully. The beer achieves the self-described rating of... drinkable. That's not very high marks!


Haha I'm sorry! I didn't know that, that's why I said "what?" I don't read the bottle because I am a huge beer snob who doesn't ever touch a Budweiser.

But I'm just one of those beer snobs who really likes drinking a good brew, not one that talks about "camel overtones" or other stuff or whatever that means. Reading beer reviews makes me angry.


I pledged a fraternity and one of the brothers made us all learn the slogan from the Budweiser bottle, so now whenever anyone mentions Budweiser I think of it, and it is really funny. I'm honestly not sure if I've ever drank Budweiser since college, but its outstanding drinkability rating, I will not forget!


You may have a point, growing up in the Philadelphia area, if I want a crappy beer I instinctively go for Yuengling.


> Not unlike beer in America (Bud Light vs Miller Lite, etc)

Please don't insult American beer by reducing it down to the very bottom of the barrel.


If you think that the way you experience the taste of what you eat and drink is not influenced by advertising, think again.


I realize there are brand images and advertising is part of that, and I'm definitely not saying they should reduce the advertisement budget to zero. I'm just saying most people like either Coke or Pepsi, and other than when you're a grocery store, the choice has already been made for you. Hell, it's rare to see a Coke vending machine next to a Pepsi one in most places.


If that is true, why would these companies spend so much on advertising?


I don't think the person you replied to is 100% on the money, but assuming he is, the companies would still need to advertise so that the venue or the restaurant purchased that product.

And the venue / restaurant is going to choose what they think people like, so smart brands would still advertise to the end consumer.


If you are advertising to decision makers in a restaurant, there are probably much more effective ways of reaching them than mass TV ads.


Yes and no. I imagine (yes, that means I made it up) that with a big enough brand, venues can piggyback on your life-style mass marketing. Both in terms you brainwashing their customers to ask for it, and in the more subtle way that carrying your brand will allow the venue to associate itself with your image (eg. Bollinger, Carlsberg etc).


Facebook style ads CAN convert in a tight window, the problem is people are looking in the wrong place for them. Nobody checks out their timeline, sees a coke ad and immediately clicks to buy. Those ads don't "convert".

What does happen is the cumulative effect of those ads put your brand (coke) top of mind. Later when somebody is searching for "snacks" on google and paid search ad comes up, that person is more likely to chose Coke than RC Cola.

You need to look at effect your "brand" advertising is having on your paid search conversion rates. The industry is trying to solve this with "attribution" schemes ie figure out which ads every converted person has seen. (shameless-plug) But my company, Optimine has a much cooler and simpler approach using incremental modeling.

Here is a white paper that I think does a decent job of explaining. http://optimine.com/assets/pdfs/Measuring_Cross_Channel_Valu...


How does this model work when people block ads entirely online?

Disclaimer: I'm 31, block all ads online, and don't own a TV. I haven't seen a TV commercial in years.


You are accounted for and not the off the grid.

You are influenced by your friends and culture. Brands try to penetrate both. You have just offloaded some of your choice/reference to friends and internet when your ready to look. They they get you.


> You are influenced by your friends and culture. Brands try to penetrate both.

Not so much. I have few friends, and their opinions don't influence my buying decisions. I could care less about brands. Show me the money (cheapest option of greatest quality, based on independent research usually wins).

I understand I'm an outlier. I'm just looking at it as an older millennial who doesn't use the radio or TV (paid pandora, video is all consumed online through mediums with no ads) and who is phasing out the use of Facebook (and rarely, if ever, logs into Twitter).


The thing is, everybody thinks they are impervious to advertising. Everybody thinks they always choose the "cheapest option of greatest quality, based on independent research." They're just mostly wrong, is all. They either don't understand the way their purchasing decisions actually get made, or they choose to tell themselves they are made differently than they are.

Which isn't to say that you're not the exception, just that generally speaking everybody thinks they're the exception. So how you think you buy things doesn't mean much; you'd have to have someone outside your own head look at your purchasing patterns to know for sure.


A single data point is too small to reason about. But lets say there was an ad campaign that was blocked at a high rate, or even just placed poorly where nobody was seeing it or something. Our scheme would assign those impressions a low value, ie it would come out that cranking impressions or lowering impressions isn't effecting conversion rates anywhere else, so why not turn the ad off.


I don't think you can block News Feed ads with Ad Block, although I am not 100% sure about this. I thought they functioned like a native ad.




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