Brad Feld

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A CPM Here, A CPM There … Now You Are Talking Real Money

Jul 12, 2007
Category Technology

Today’s Techmeme meme is based on Facebook advertising brings poor results.

Most of the posts are talking about the rotten clickthrough rate (0.04%) on Facebook.  Some of the posts – like Scoble’s – have some constructive suggestions about how to make the advertising more relevant (note to self – “tie it to people, just like Google ties AdSense to search results.”)

In the past two weeks, I’ve seen or heard of four Facebook focused ad networks that are about to launch that are specifically aimed at Facebook apps.  One of the TechStars companies – J-Squared Media – has a rapidly growing Facebook up (Sticky Notes – 232,137 users – ranked #52) so we are getting an inside look at the action, traffic dynamics, and advertising (oh yeah – and dealing with scale on short notice.)

So far, it’s all about the CPM.  I’ve seen proposals ranging from $0.50 / CPM to $15.00 / CPM.  Do the math – it’s interesting.  I expect the CTR will be low (< 0.1%), but some of the CPM based ads that I’ve seen are awesome and – especially if they are interactive in page with a call to action – render CTR meaningless.

Remember also that Facebook doesn’t really want anyone to leave Facebook (at least I don’t think they do.)  In a conversation yesterday at Me.dium, we were trying to figure out the correct way to describe it (e.g. “inverted AOL”, “walled fortress”, “AOL 2.0 without the fee.”)  We never got satisfied with the label, but the concept is an important one if you are trying to figure out the really effective long-term advertising approach.