Joseph Perla, a blogger, posited recently that Facebook is a Ponzi scheme because according to him, its huge ad revenues were based on selling a product that "yields no real value, and thus no profits" to an increasingly small market of advertisers.

I disagree completely with that argument and here's why.

Context

First of all, a bit of context. eMarketer has just published a report which estimates that Facebook took in $1.86  billion in global ad revenue in 2010, which is 2.5 times its 2009 estimate ad revenue.

Furthermore, as shown below, the company's share of global online ad spend has tripled since 2009, with revenues coming from a broad spectrum of advertisers ranging from major marketers such as Coca-cola, Procter & Gamble, and AT&T to small businesses such as restaurants, auto mechanics, and small websites.

A huge chunk of that money is coming through Facebook Ads, the company's self-service advertising system. A runaway success, to say the least.

Analysis

Ok so Facebook Ads is making a tonne of money. The next question is – why?

According to the company, the principal benefit of advertising with Facebook is an opportunity to establish a connection with a highly targeted demographic to whom your message is highly relevant.

Simply put, Facebook's job is to create that connection whilst your job as a marketer is to send a highly relevant message. If either of the two fails, your campaign is toast.

Let me explain that from another angle.

Facebook Ads will get you in front of a highly targeted audience (because it has a lot of information about its users) but once the stage lights are on you (or more accurately, your itty bitty text+image ad), you must perform. Dance baby, dance.

Success isn't going to be based on witty text, more prominent call-to-actions, or clever images. In contrast, success with Facebook Ads is going to be all about thoroughly understanding the mindset, emotions and disposition of the user and making the most out of that temporary connection.

Coca-cola understands this well with its focus on brand awareness, and so does Match.com and the thousands of other direct response advertisers who are pleased with the service.

I'm a big believer in the potential of self-service ad systems. Heck, we even built a fast-growing business around that concept. To me, Facebook Ads has nailed the two key success factors of a self-service ad system.

1. Ease of use – by making it dead easy for practically any business to advertise, and
2. Targeting – by integrating its huge database of demographic and behavioural info with a highly intelligent system of ad servers.

I think the point where many marketers go wrong is when they just see users as "eyeballs" to whom you can show any old generic message and hope to attract 1%. That's just plain wrong. If your target base is too broad, the chances that your message will fall flat just increases exponentially.

Put in another way, you don't have to target 10,000,000 users in order to create a good campaign. Get it down to less than a million (or even less), and put in a good bid price. You may end up paying more per click or impression but the chances that the audience will interact positively with your ad (directly or subliminally) are much higher.

Summary

So whilst it is true that some advertisers aren't making money from their Facebook ad campaigns, the fact is many others are doing perfectly well. It's simply a case that some advertisers know how to target their audience and deliver the right message whilst others don't.

The ones that are currently getting it right will only get better, and just like with SEO, others will learn the best practices and play catchup. The same thing happened when AdWords launched. Some people got it right, whilst others didn't.

So back to Facebook. Their role is simply that of a connector. One that's bloody good at its job and has an increasing amount of resources on which to get better.

With revenues and profits at an all-time high, fantastic technology under its belt, surrounded by an ever larger ecosystem of businesses that depend on it, it's going to be hard to bet against it.

Facebook might be many things but a Ponzi scheme, it is not.

Related posts:

1. The login screen now supports Facebook, Twitter, Google, Yahoo and more
2. How to Set Your Ad Prices Via a Real-time Auction Like Google and Facebook

We've done it again. We've simplified the advertiser experience in Trafficspaces by making it simpler and faster.

In the past, it took about five or more steps (and about five minutes) to create an ad campaign. Not any longer. From today, advertisers can get started in less than one minute.

We drew inspiration from John Maeda of MIT. In his book, The Laws of Simplicity, he argues that "Simplicity is about subtracting the obvious and adding the meaningful".

Simply put, when designing a self-service advertising system, the key to increase conversions is to

1. Engage them early

First off, after selecting their ad zone, they should see a outline of the ad zone's dimensions.

This helps them get a mental view of how their ad will appear on your site.

Secondly, they should be able to design their ad and preview the changes live on the same page. If they make a change to an image, flash, or text ad, the changes should be live on the same page, without needing to refresh it.

And one more thing, they should be able do all that before creating an account.

2. Save time

Even a newbie advertiser should be able to get started in one minute. Anything longer than this, and people start to abandon the process. Every piece of info they need should be within easy reach – ad preview, targeting preferences, budget, estimated impressions and billing info.

The result. You'll get more advertisers signing up and creating ad campaigns (even if it is to try you out). You've gotta love it.

We've added these improvements to Trafficspaces, and the changes are a breath of fresh air because they'll help you get a good Return on Investment on your Ad Store.

Try it out on the demo and tell us what you think.

Many thanks to Kyle Q. Yan and Art Agrawal for all their advice.

Related posts:

1. How to Use Coupons and Discounts to Increase Ad Sales
2. The login screen now supports Facebook, Twitter, Google, Yahoo and more

This is the 1st post in our 3-part series on How to Make Ad Targeting Work, in which we'll discuss various ways in which you can make your advertisers happy by helping them get the right ad in front of the right person at the right time – the Holy Grail of Advertising.

We'll start off with social and demographic targeting, which is all rage at the moment .

Next week, we'll discuss ways to make best use of geographic and language based targeting.

Finally, we'll round off with an in depth look at how to improve contextual and interest based targeting on your site.

Okay, let's get started.

So what exactly is demographic targeting?

Simply put, it is a technique that allows you to direct ads to the people who might be most receptive to it based on their profile or social information such as their age range, gender, income range, relationship status, religion, academic qualifications etc. The list is virtually endless.

The main advantage is that it helps advertisers create ads that don't suck.

For example, you don't want to show a hot dating ad to a couple who are happily married, nor does it make sense to show an Extreme Sports ad with Brody Wilson doing a motorcycle somersault 100ft in the air to my grandma.

Well, I take that back. My grandma might actually like that sort of thing.

Anyway, you get the point. So the next question is how do you get it to work?

Getting started – the advertiser's perspective

For advertisers, applying demographic targeting is a fairly simple process. If they've ever used Facebook Ads then they've probably familiar with it already.

The screenshot below shows what it looks like on Facebook.

Now here's a screenshot of what it looks like in the Trafficspaces Ad Manager.

Very similar indeed. Both systems let advertisers customize their ad targeting on a per-ad basis which is really cool because it allows them to do multivariate testing.

Multivariate testing is simply a way to test many ad targeting assumptions at the same time with a view to determine what works best.

Once the advertiser determines which combination of demographic targeting preferences works best with your users, they can really optimize their ad spend and get the best ROI (Return on Investment).

It's a win for you, a win for your advertiser, and most importantly, a win for your users.

Sounds fantastic. So, how do you set it up in Trafficspaces?

Getting started – the publisher's perspective

First of all, you have to switch on ad targeting in your system setup.

1. Go to the Setup->System->Preferences section
2. Switch on the ad targeting options that you wish to offer. Don't be tempted to switch on all the options because doing so may overwhelm your advertisers.
3. Click on Save Changes and you are good to go.

The second step is to integrate it with your site.

At the beginning of this article, you may have been thinking "How in the world is Trafficspaces going to know if the user is male or female?". Simple, with a bit of  Houdini-esque magic. Just kidding. The answer is "through integration".

When a user visits your site, their browser makes a call to fetch ads from the ad servers. This call contains information about the user, and the interesting thing is that you can customize the information on a per-user basis.

Like most sites on the web, your site is probably driven by a dynamic server-side programs written in PHP, ASP, Java etc. What this means is that if the user has signed in, then your server-side program will normally have access to extra information about the user that it will typically use in creating a customized page. That's pretty much how most social networks, dating or community sites work. If you also have snippets of profile info about your users, then you are in good shape to make use of demographic targeting.

The third and final step may be slightly technical so feel free to send it to your techies.

You'll need to install the advanced ad tag on your site. To grab it, go to the Setup->Ad Zones->Ad Tag->Advanced page. You should see something like the screenshot below.

As you can see, there is an attribute called TS_AdService.flags which contains arrays for each type of ad tageting you've switched on. To pass information about a female user, you can just set TS_AdService.flags.genders = ["F"]; It's pretty much that simple.

To download the full list of codes, go to the Setup->System->Preferences->Advanced section. You can also customize it with your own codes.

Conclusion

That's it. You don't have to spend a million dollars to provide demographic targeting that works beautifully. Create your own ad store and it comes out of the box.

It is the simple things that make the most difference. Allowing advertisers to improve their Return of Investment makes them happy and that's a good thing.
 

No related posts.

Hey guys,

What better way to welcome in the Summer season than to give the entire website a new coat of paint.

That's exactly what we've done. We've tinkered with the site's design and I sincerely hope you guys like the new look.

One of the major changes is the introduction of a new a fresher, bolder logo. We love the unapologetic use of vibrant natural colours and the confident use of leafy green throughout the site.

We've also introduced several new pricing plans and simplified the entire subscription workflow.

The free plan is still available and for new premium subscribers, there's a special surprise on the subscription page. 

Overall, we love the new look. It's bright, it's green and it's full of confidence.

We hope you like it.

Related posts:

1. Trafficspaces Exits Stealth Mode
2. The Free Trafficspaces Package is now available
3. Techcrunch Switches to Self-Service Ad Platform and Validates Trafficspaces’ Business Model.

We are pleased to announce that Trafficspaces now supports multiple currencies.

When we launched Trafficspaces, we only supported the US Dollar ($). However, after receiving an increasing number of requests to support support currencies like the Euro, British Pound and Aussie Dollar, we've finally done it.

How it works

Simple. When you setup your Trafficspaces ad platform for the first time, you'll be prompted to choose between over 20 currencies. The currency you choose will be your default currency. You won't be able to change it once you've created the platform.

Here is the full list of supported currencies.

1. U.S. Dollars — $
2. Euros — €
3. British Pounds — £
4. Japanese Yen — ¥
5. Canadian Dollars — $
6. Australian Dollars — $
7. New Zealand Dollars — $
8. Swiss Francs — CHF
9. Hong Kong Dollars — $
10. Singapore Dollars — $
11. Swedish Kroner — kr
12. Danish Kroner — kr
13. Polish Zloty — zł
14. Norwegian Kroner — kr
15. Hungarian Forints — Ft
16. Czech Koruny — Kč
17. Israeli Shekels — ₪
18. Indian Rupee — ₨
19. Nigerian Naira — ₦
20. Mexican Pesos — $
21. Brazilian Real — R$
22. Malaysian Ringgits — RM
23. Philippine Pesos — Php
24. Taiwan New Dollars — NT$
25. Thai Baht — ฿

We'll be adding more currencies shortly.

You just have to make sure your payment gateway supports your chosen currency.

If you will like us to support a specific payment gateway, just contact us directly.

Related posts:

1. New Feature: Conversion and ROI Tracking for Advertisers
2. Get a Self-Service Ad Manager In Your Local Language
3. Receive payments directly from advertisers with PayPal, Authorize.Net and USAePay