Facebook Display Ads - A round peg in a square hole?

Despite the promise of Facebook display ads, the response rates thus far have been abysmal. Recently, analytics firm WebTrends examined 11,000 different Facebook ad campaigns which totaled 4.5 billion impressions . Webtrends found that in 2009 the average click-through rate on Facebook was 0.063 percent. That figure slipped to 0.051 percent in 2010.

Despite the ability to target very specific demographics with contextual advertisements, the results are disappointing to say the least. Advertisers are pouring billions of dollars into social display ads hoping the new medium of social media will yield better return for their interactive advertising dollars.

The problem with social display is that it doesn’t match the medium. Social media has changed the way people interact online, so logic would say it might also change the way people interact with advertisements. Google’s adwords (the sponsored search results on the side of each search query) have been around for nearly a decade and display ads even longer. Taking an old advertising (if ten years is old) approach and trying to fit it into a new medium might make sense on the surface, but is it really surprising that response rates are so low. Or is social display like trying to fit a round peg into a square hole; It doesn’t make cents.