Is 10% of Facebook Revenue Generated By Booklicants?

UPDATE: I just published a new posting based on the recent BBC and TechCrunch articles that includes a more recent communication from Facebook customer support. I hope this post is helpful, and you may also like this email thread between me and Facebook customer service about the problem. However, we are in the app business, not the advertising business, so if you have a chance please help us out by signing up for our beta. Thanks.

I just met a booklicant in a Technology Review online discussion about Facebook and asked him why he clicks on so many things, specifically:

…I just looked at your public FB profile, and it appears you are a type of “booklicant”! What I mean is that you like an unusually large number of pages/things, sometimes several all at once (see my blog posting at http://wahanegi.com/dont-believe-the-like/)…unlike many of the profiles that liked our page, you tend to like things in somewhat logical batches. For instance…in ten minutes on March 14th you liked Kew Bridge Steam Museum, The Wilmington Arms, TechHub, The Comedy Pub, Stewart Lee, and the First Class Lounge at London Euston. Do you remember why?…Just curious, since Facebook isn’t providing us any useful guidance and you seem to be quite knowledgable. Thanks in advance.”

He is a helpful guy, and he replied:

I’ve never heard that term before! I will read your blog post as soon as I get the chance, it sounds interesting. Yes, I do remember why I liked things in batches. Facebook suggests things for you to like in the right column on some pages. As soon as you click to like one of them, it replaces it with another suggestion. I’m quite happy to like thousands of things on Facebook as it improves the kind of stories and ads that come up in my news feed and again in the right column. I would rather see things I am interested in than things I’m not. 

Of course!

In other words, there are a good number of real people who ‘like’ a lot of things on Facebook not because they have a strong affinity for the ads they click on (assuming some/all of those suggestions are paid for), but because with a bit of effort it makes their personal Facebook experience better in many ways if they click the word ‘like.’ Plus, they even get a ‘score’ for doing it in the form of a counter on their profile page showing how many things they like. In other words, it is a useful collecting game of sorts, like collecting stamps or delicio.us bookmarks or following people on Twitter.

This sort of clicking may have existed in the PPC ad world for a while, but clearly it is an entirely different animal on Facebook since their very nice product makes it a lot easier, more pleasant and more useful for booklicants to do their thing. It also makes it easier for advertisers like Wahanegi to see what’s happening. While Facebook does not respond to email inquiries asking for refunds for such clicks (UPDATE: they did partially respond, see this posting), and we don’t get the data until after we pay the piper, it’s not like they are hiding anything. The data is right there for anyone who bothers to look.

Assuming these booklicants are real people like my new Tech Review friend and thus technically valid clicks, they are also a disproportionately valuable part of the Facebook community/audience from a Facebook advertising revenue perspective. That sort of skewed usage distribution certainly maps to my experience with large online apps with millions of users – the vast majority of meaningful usage of specific product features often comes from a very small number of users who really love them. The Pareto principle is a king on steroids, while averages are for weakling dummies.

So, some math, using averages. Since the average booklicant likes over 40 FB pages per day, and from informal polling the average of my personal friends clicks on far less than one sponsored ‘like’ per month, we are talking a usage ratio of 1000:1 ratio or higher. That means nine thousand booklicants could generate the same number of clicks as a nine million typical audience members…in other words, a few thousand users generate as many ‘likes’ as one percent of the Facebook user base.

Hmmm.

In our test campaigns we captured over 500 booklicants in a weekend with a couple hundred bucks, it was pretty easy. So let’s say there are 900,000 booklicants (roughly the 1000:1 ratio above just to guesstimate)…then from a click inventory perspective the 0.1% of Facebook users who click ‘like’ a lot to improve their Facebook experience in various ways would be equivalent to the 899.1 million of the rest of us combined.

Hmmmm.

Even more meaningful from a Facebook ad revenue standpoint, this booklicant behavior would preferentially inflate early click-thru rates for a range of advertisers, thus giving encouragement to all us little guys to spend more to keep chasing that early success. At least until we all realize that it’s not working as we expected.

Hmmmmmm.

Could it be that 0.1% of the Facebook user base is generating 50% of their ad revenue while semi-bamboozling us muppet advertisers? Hard to believe, probably not true. But even if it is only 10% of their revenue, it is probably the most consistent, most profitable and fastest growing slice, in which case the situation would pose a very thorny problem for the Facebook business. Most advertisers like us want to pay for the ‘likes’ of people who actually like our stuff, not people who want to use our ads as a way to improve their general Facebook experience. That is why I asked for our money back. That may also be why some Facebook folks read my emails and blogs (psst, your IP addresses are showing) but have not responded to any of my inquiries. I presented them with a complicated problem…as if they needed any more problems…I don’t know much about Zuck but I do hope Sheryl is hanging in there.

A DISCLAIMER AND SOME STORY TELLING

I ran these quick estimates and speculations while doing other things that are more important to me than advertising on Facebook. I do not have a position in Facebook stock either long or short. I say that to get any conflicts of interest, lack of rigor, and lingering questions about the satirical nature of the rest of this post out in the open before dispensing the following free advice to a massive global company full of smart hard-working people in the midst of a crisis. :-)

If I was running Facebook in a vocally omniscient and omnipresent third-person sort of way, I would say:

“OMG, this is not working in many ways, but we do have a bunch of cash and a bunch of engaged users and a lot of smart people and brand equity around the quality of our product. We need to act boldly, and quickly, before the Lilliputians tie us down.

It is time to begin charging our users for use of the service…no, don’t pile on, I don’t mean the current service, I mean all the things we are going to acquire and build in the next three years.

First, let’s acquire Zynga. We helped to hammer their stock, we have mutual investors, we can immediately make more money together, the overall global gaming market is large and we can make it a lot larger. Plus, they figured out an amazing business model that we didn’t. They sell things that don’t exist to help people improve the experience of their enjoyable diversions. Oh, shoot, Pinkus and Zuckerberg are unlikely partners. Well, there are no atheists in foxholes, so maybe they can come to believe in each other when under fire. Or maybe they are ready to ascend from this earth…

Second, let’s acquire Wahanegi. That Larson character seems pretty smart and fun, and although he has been somewhat coy about he’s working on, I hear through the grapevine that it’s fun, makes people happy and wise, mints money measured by volume in units of container ships, and can be the basis of our new 21st century corporate philanthropic giving plan. Plus, he writes blog postings. That is a sign of creativity and intelligence. He can work for Pinkus. Whatever, I don’t have time for it, just grab some pocket lint from Zuck’s hoodie and get him in here, stat. 

Third, let’s acquire eBay. Yes, eBay. I want PayPal, and I want to make it even easier for a new generation of people to clear out their closets and convert their garages to warehouses for cash. Bezos will never knuckle under no matter how scary Zuck looks in a hoodie, so let’s take them on Facebook-style. I don’t know what that means, you figure it out. Yes, I’ve seen their stock price! No, it won’t be like AOL buying Time-Warner…what is AOL?

Let’s build some more awesome stuff, too.”

Ring. Ring.

“Hello, this is Erik…is this about the booklicants? You want to what? (time passes) OK, how about $5M in cash up front plus $1M and 300,000 RSUs per year for three years and a strong accelerator if I ‘leave to pursue other interests.’ What do you mean you need to check the other pocket?…Oh, and Wahanegi remains a separate independent entity so that we can keep all our user data 100 percent private and anonymous by default…yes, they can share if they want to, I’m just talking about the default. Private and anonymous. By default. Why? Well, let’s grab a coffee, beer or bizarre organic beverage and talk about that, it mostly has to do with asking people for money while they make themselves happier. Of course there’s still a lot of work to do on the design, but anyway…”

11 thoughts on “Is 10% of Facebook Revenue Generated By Booklicants?

  1. Pingback: Don't Believe the Like - Avoiding Wasted Time and Money on Facebook Ads | Wahanegi

  2. Avatar of erikerik Post author

    From: Erik Larson
    Date: Thu, May 24, 2012 at 9:18 AM
    Subject: Re: Help with Your Ads Manager
    To: The Facebook Ads Team

    Hi Neil,

    Thanks for the reply, I appreciate it. Thought you’d forgotten about me ;).

    In the intervening three weeks I’ve done my own research, which makes this easier.

    To keep things simple, I would like to shrink my request for refund and limit it only to the money we spent to advertise ‘liking’ our page at http://www.facebook.com/wahanegi. I am requesting the refund because a large number of the clicks appear to be as a result of Facebook users engaging in behavior that has very little to do with a meaningful response to our ads and is mostly about their attempts to enhance or enjoy their own experience using Facebook as suggested by your product interface. You can read more about the problem here: http://wp.me/p2dKfK-5s.

    If you also want to keep it simple, then please just refund all of our money from the following two campaigns on our Wahanegi account:

    $109.91 spent on We Need Your Help – ANZAC
    +$62.40 spent on We Need Your Help – Philippines
    —————————————————————
    $172.31 total

    If you want to be more specific, then you can easily do the required reporting, because all of that traffic stayed on your servers and was driven by users authenticated into your app. Further, since Facebook does not provide sufficient reports for advertisers to allow us to determine how much money was spent to generate any particular ‘like’ by a specific user, it is literally impossible for me to provide you with the necessary data to get a more accurate sum. You must do it.

    If you want to go that route, then I am specifically asking for a refund for any clicks that we paid for that came from Facebook users that hit the following filters:

    Refund money for any paid clicks from users who have liked more than 499 pages in the past 12 months, OR that liked more than 9 pages on the same day they liked our page, OR that liked more than 149 pages in the past 12 months AND more than 5 pages on the same day they liked our page.

    When you run that report, I would appreciate it if you could provide the full results to me so that I can review them for accuracy and decide if I want to remove or block any of those users.

    Finally, if you don’t want to do that work but feel that I am asking for too much since these clicks might be legally valid even if they are [essentially] meaningless as a measure of advertising effectiveness, then maybe we can compromise. I estimate that the filter above encompasses about 90% of the clicks we paid for. So you could also just refund $150 and we’ll call it even.

    Please reply either way and keep me in the loop wrt your progress and any questions you have.

    Cheers,
    -Erik

    On Thu, May 24, 2012 at 8:08 AM, The Facebook Ads Team wrote:

    Hi Erik,

    Thanks for following up and giving a detailed background to this issue. I really appreciate your inputs and will make sure your feedback is heard by the products team.

    Meanwhile, we are happy to look into this further if you can provide us with detailed click logs documenting the activity you’re concerned about. We aren’t able to investigate this further without actual traffic logs. We understand this may be a frustrating process, and we apologize for the inconvenience. Please contact your web hosting company directly if you have questions about how to obtain server logs detailing individual clicks or visits to your site, as we aren’t able to verify data collected through third-party tracking systems. In order to assist you further, please include the following information from your server logs:

    (A) Raw server logs of all clicks coming to your website, or the total amount of all clicks coming from Facebook, with an explanation of how you filtered them. These server logs should, at the very least, include:

    (1) Timestamp of page load
    (2) User agent string
    (3) User IP
    (4) Exact page loaded, with the parameters passed to the page load if you are doing URL tagging. Please note: a popular tracking method is to link your Facebook Ad(s) to unique URLs that are only used for specific Facebook Ad campaigns. Another tracking method is to add an extra, identifying parameter to your URL. By doing so, you’ll be able to isolate visitors who reach your site through Facebook Ads rather than other traffic sources.

    (B) Aggregated counts of your clicks.

    If possible, please also include the following:
    (1) The total number of clicks you received from Facebook, split by day, for the specific time period where you have noticed the click issues.
    (2) The total number of clicks you were billed for, by Facebook, also by billable day for the period in question.
    (3) A screenshot of your external reporting system showing the total number of clicks received from Facebook.

    Please note that we do filter out any clicks that appear to be invalid, including repetitive clicks from a single user, clicks that appear to be from an automated program or bot, or clicks that are otherwise abusive. We also cap the number of times any user can view or click on an ad. Rest assured that we take discrepancy reports very seriously and will be happy to take a look through our and your logs for any indication of invalid click activity.

    Thank you for your continued patience,

    Neil
    Global Marketing Solutions
    Facebook

    —–Original Message to Facebook—–
    From: erik
    To: The Facebook Team
    Subject: Help with Your Ads Manager

    Select: Other

    Describe your question or issue: Two weeks ago I inquired about the validity of a large percentage of the clicks from campaigns that we ran via this company account and my personal account. I also followed up with an extensive description of the problem, but have heard nothing since. I just made a blog posting about it (http://wahanegi.com/dont-believe-the-like/). Please review and respond. Thank you.
    —–End Original Message to Facebook—–

    Reply
  3. Pingback: Do Not Advertise On Facebook Until You Read This | Wahanegi

  4. Pingback: Do Not Advertise On Facebook Until You Read This | Wahanegi

  5. Pingback: Facebook Booklicants: Why BBC & TechCrunch Missed the Point | Wahanegi

    1. Avatar of erikerik Post author

      David and I had a side conversation, he seems like a gentleman and I appreciate his reply. Taking a hatchet is not my intention. I believe if you see something that is not right, you should act against it. As soon as Facebook tells me I am wrong or explains what is happening in a clear manner in a public forum, I will take this down. Until then, I’ll leave this up as what I believe to be a truthful and fair warning to small advertisers.

      Reply
  6. Darryl

    Well i think facebook is a fad on its way out! I don’t use it anymore, nor do most people I know. So you might as well find a different way to advertise. Nothing can beat direct communication face to face, instead of looking at a computer constantly. There’s a big world out there. Go experience it first hand. You might like it!!!

    Reply
    1. Avatar of erikerik Post author

      Dude, the real world is over-rated…it must be, just look at how much time people spend commenting on random blog postings! ;)

      Reply
  7. Revolt Communication (@INKYBRAIN)

    FB advertising is a sham. I was about to activate a brand new domain which was not live, and set up FIVE tracking softwares for traffic, site AND server level. Tested out facebook ads to measure their response, and for every ACTUAL visitor I had received facebook had reported that they had sent 2 people, well, at least they billed me for 45% more clicks than the number of visitors who visited my site. Basically, double billing. I wrote FB, and was basically told that external tracking software cannot accurately track the number of clicks, but they couldn’t explain that the number of clicks I was paying for was 45% higher than the actual number of visitors total.

    I stopped advertising with FB and have recommended against it with every client considering it. If you need to advertise online, adsense is your best most affordable solution. FB is the opposite.

    Reply
  8. Pingback: Facebook EdgeRank Explained: How it Works, and How to Beat It | Social Media Sun

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