Is Facebook Failing to Serve Digital Marketers and Leaving Millions on the Table?

NEW YORK (TheStreet) -- How will Facebook (FB) eclipse digital advertising rivals like Google (GOOGL) with inferior service to its most important customers?

Over the course of the last month, Webimax, the Camden, N.J.-based digital agency at which I'm CEO, attempted to spend thousands on Facebook ads, but due to an error on Facebook's end, some of our ad campaigns -- and therefore the spends -- were abruptly frozen. As we were scrambling to fix the issues, there was no live support to get our ads running, emails went unanswered and our requests for support were met with automated messages that provided no solutions. Facebook missed out on tens of thousands of dollars from us. Even after the problem was resolved, Facebook blew off three scheduled "Ad Specialist" calls.

In a stark contrast, Google has become extremely available to advertisers, like those we service, offering an array of new products and additional support to its customer base. (That said, the new ad products haven't resonated well with audiences and are not viable for many ad campaigns.) While marketers continue to place a large emphasis on Google's AdWords platform, which is extremely efficient, a lot of money is moving out of those budgets and into Facebook as it has become the more viable mobile platform.

With more digital ad budgets shifting away from Google and into Facebook's ad platform, is it possible that Facebook simply can't meet the demand placed on it by its advertisers? It certainly appears that way, at least to us in this agency. Companies like ours control a large portion of Facebook's revenue, so it's easy to imagine that the company could be leaving millions of dollars on the table.

The demand for placement on Facebook's ad serving platform has skyrocketed largely in part because of its complete dominance in the mobile ad serving sector. Mobile advertising accounted for 73% of all of Facebook's ad revenue in the first quarter, compared to 59% in the first quarter of 2014. All of this increased demand for ad space has pushed Facebook to hire more employees to meet the needs of advertisers and in turn, leverage more revenue growth. Facebook's employee headcount has risen almost 50% higher in the last year, but even with that increase, can the company meet growing demand from some of its most important customers, who are thirsty to place more ad budget onto its platform? If our example is an indication, perhaps not. 

Other competitors have also increased their presences looking to steal ad budgets away from Google, but with far less successful results than Facebook. New ad offerings from Twitter (TWTR) and LinkedIn (LNKD) have not provided the results advertisers are looking for. All of this fluctuation has left Facebook in a position to gain more revenue.

Yes, Facebook did miss earnings estimates for the first time in 11 quarters, but it also once again demolished its user growth estimates (daily active users were up 17% year-over-year and mobile daily active users were up an incredible 31% year-over-year). Though it is my feeling that Facebook's ad platform and management is not where it needs to be, when it inevitably does mature, revenues will explode. Facebook has clearly established itself as an absolute opportunity for growth -- even if it won't answer my calls!

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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