11/19/2012 07:13 pm ET Updated Jan 19, 2013

Facebook Collects Tons of Data and Still Can't Cut It for Advertisers

The promise and allure of Facebook was that it would be the new advertising mecca. Their analysis of users' habits would allow precise targeting of potential customers. No longer would advertisers waste millions of dollars in television's vast wasteland or buy ads in print outlets around the country. Simply trust the geniuses at Facebook to gather the data, and then sit back and just watch the money roll in.

As with most "great ideas," Facebook failed to live up to its promise of delivering advertising results. Growth in advertising continues to slow as Mark Zuckerberg and his minions struggle to demonstrate their value to marketers. The biggest Facebook fiasco came just before the company's infamous IPO, when General Motors pulled its $10 million advertising budget, claiming the ads just didn't work. In July The Wall Street Journal reported that the two companies were in talks to resume advertising, provided Facebook can supply concrete data that proves the value of its advertising.

A Billion Users and They Can't Deliver Value. What's Wrong?

MIT Technology Review recently ran some fascinating articles on Facebook. Their July/August feature story, "What Facebook Knows," reported that, with the company's social scientists looking for human behavior insights, they could provide Facebook with new ways to cash in on our personal data. Think about the information that Facebook's "Data Science Team" has access to, which you voluntarily provided to them:

  • Complete listings of friends and family members.
  • Private and public conversations.
  • Photos of life events.
  • Details of day-to-day activities.
  • Knowledge of your likes on a wide variety of topics.
  • Listings of businesses you've frequented and trips you've taken.
  • Relationship status.
  • Age, gender, birthday, telephone, address, and email contact info.
  • Web pages that you've "liked."
  • Songs you've listened to and articles you've read.

In the same issue a review by Michael Wolff, "The Facebook Fallacy," claimed that for all its valuation Facebook is just another ad-supported site without any earth-shaking ideas that it can use to unseat traditional advertising media. It collects all this data but isn't informing advertisers of its value. The small ads pop up on the side of a user's page with minimal to no targeting whatsoever, and they cannot really supply any information regarding conversion rates. There is no personalization for the user experience and no engagement. In the September/October issue Peter Glassman provided feedback that wondered why we even give Facebook our personal information so willingly when the only thing they give us in return is more advertising.

What is wrong here is that, despite its impressive accumulation of users and data, Facebook is still unsophisticated in packaging this information for advertisers. This is similar to what we are seeing in all social media, which is really still in its infancy when it comes to advertising. The problem is that marketers are looking at this as another way of communicating in a mass way when people consume social media in a different way than they consume mass media.

The solution lies not in just blindly accumulating more data, but in garnering real understanding. Facebook has amassed an enormous amount of information, but they have not yet developed the sophistication to deliver this data in a meaningful way. They need to do less pure data mining and take an anthropological approach to evaluating their data in order to deliver true understanding and usefulness to marketers.

How can we use the power of social media to influence behavior and effect change? Clearly, if Facebook isn't capable of achieving changes in buying behavior with all of the information it has at hand, how are we mere mortals to ever accomplish our goals? At Lucule, we are developing a model called the Social Media Pénte, which will provide communicators with the benefit of the knowledge that social media users have changed their habits and will pay attention to their messages in a different way.

No longer will it be effective to communicate in a mass media way when the target audience is consuming in a personal media way. This model, which we previously referred to as the Cube, is itself evolving as we work with clients and gain more understanding of its five facets: type of message, when it is received, "socialness" of its recipient, medium and delivery device. Understanding the way people use social media means the kind of promotional and marketing programs consumers will pay attention to and respond to with their purchasing dollars.

Social media is not set up to be effective for advertising, but to be used for communicating. Those who want to use social media as a real form of influence will need to bring passion, perseverance and cultural insights based on anthropological underpinnings into play as they learn to use it as the personal communications tool it was meant to be.