The August 3rd NY Times has an article about the advertising of Fishoil and Facebook. As sometimes happens with a NYT article, the interesting issues are buried beneath moderately interesting anecdotes that may be traded with others at the dinner table in what passes for serious discussion.
The story is about a company called MegaRed, that peddles fish oil. It wants to target consumers who are receptive to the idea of fish oil because they believe that it confers health benefits. The goal is to get them to try out and perhaps switch to MegaRed.
Facebook proposes a campaign which raises the eyebrows of the marketing director, J. Rodrigo:
“I can go to television at a quarter the price.”
Brett Prescott of Facebook agrees, that yes, Facebook is more expensive than TV. But offers an analogy between advertising on Facebook and firing a shotgun.
“And you are firing that buckshot knowing where every splinter of that bullet is landing.”
If biology is the study of bios, life, and geology is the study of goes, the earth, what does that make analogy?
Some arithmetic to clarify matters. Suppose 1 in 100 of all people would be receptive to the idea of MegaRed’s message. Suppose each of these people is worth $1 on average to MegaRed. If you could reach all 100 of these people via TV, then MegaRed should pay no more than 10 cents per person and so $1 in total.
Enter, stage left, Facebook. It claims that it can target its ads so that they go just to the right person. How much is that worth? $1. In this example, Facebook is no better or worse than TV.
If Facebook has any added value compared to TV it does not come from better targeting because one can always compensate for that by paying TV less and reaching more eyeballs. It must come from access to eyeballs unreachable via TV, or, identifying eyeballs that MegaRed would not initially have identified as receptive to their message, or that the medium itself is more persuasive than TV. Is this true for Facebook? If not, MegaRed is better off with TV.