Advertising on Facebook and MySpace: the “Grinda Hypothesis”

In a recent post, Facebook: the next Google?, I expressed skepticism on the value of Facebook given the nature of advertising there.

A year ago, I expressed similar doubts on the advertising on MySpace to a friend. He coined my analysis the “Grinda Hypothesis”: if you put an ad near a hot girl on MySpace, nobody will see it, let alone click on it.

I would generalize the hypothesis to be: if the advertising you see is not related to what you are actually doing, you are unlikely to notice it and click on it.

As I am only looking at what my friends are up to on Facebook or whether I can find a hot, interesting single girl on MySpace, I doubt they can ever display an ad I will be interested in even with the most sophisticated analysis of my profile and site activity.

Conversely, this is why search marketing is so powerful. The ads are directly related to what I am looking for.

To test the hypothesis, we tried advertising on Facebook for OLX with dismal results so far. We are using a higher CPC than we pay on Google and we just can’t get anyone to click on the ads!

Fred Wilson seems to be having similar problems with his Facebook ad. See:

  • Comme tu l’as sûrement vu, la stratégie de facebook est de definir une nouvelle forme de promotion basée sur une relation interactive plus que sur de l’impression de bannières. Je pense qu’ils sont bien conscients des limites que tu évoques

  • For Myspace ou can get pretty good results advertising dating sites, specially the raunchiest ones (such as

    I’ve seen the numbers of some guys that were doing this (they were using less than orthodox methods, for example creating fake profiles and basically stealing traffic from myspace) and their conversion numbers were impressive.

    For facebook it might be harder unless you can isolate very specific interest groups.

    Facebook/MySapce/etc. won’t be good at selling everything as google is able to do but I believe they can do very well for the right groups/niches.

  • the problem lies more in the real value of my netork of friends. I have got so many friends on my facebook that i don’t even know if they are friends or not. it’s people i know, I met (sorry if they read this but they will understand because they are in the same case as me). My feeds are a mess and do not interest me anymore and the viral effect through mails makes me uncofortable with the brand. Quantity Vs Quality.
    i really appreciated this depth analysis about social network and facebook more specifically