According to Elliott, Facebook no longer prioritizes affinity and social connections in its ad products, and is now so enthralled to revenue growth sourced to lower-funnel advertiser demand that it can't see how much it has alienated many advertisers. Facebook's failings, as detailed by Forrester, also touch on its neglect of non-paid tools products such as Brand Pages and a poor overall quality of service -- even for some Fortune 500 companies. (Facebook offers special tools and opportunities to members of its Client Council. As a result, Council members are generally satisfied, while "hundreds of billion-dollar companies are not getting that special attention and are overwhelmingly dissatisfied," said Elliott.)
The affinity data to which marketers have access is very thin, according to the report. "Facebook needs to do more and do better ," Elliott said. "When Facebook says, 'We think someone's purchase history in Epsilon's database is more effective than affinity data,' that just means the purchase data is better leveraged."
In a phone interview, he was careful not to imply negative intent on Facebook's part. "The conversations I have with Facebook indicate they honestly believe they are serving customers well. I think the massive revenues have blinded Facebook executives to the growing dissatisfaction of marketers who pay their bills," he said.
One interpretation of the data is that Facebook has optimized its ad algorithms for its own yield rather than for advertiser objectives. As Forrester notes, fewer than 15% of Facebook paid media impressions use social data to target audiences. That ratio might be higher if ads with social data weren't squeezed out by higher bids from advertisers targeting users lower in the purchase funnel.
Elliott is urging clients to put pressure on Facebook, by eliminating dedicated budgets and forcing it to compete with other websites for spend. But he's not optimistic.
"We don’t believe that Facebook will make the changes needed to win back marketers’ hearts," he writes in the report. "In fact, we don’t believe the company even sees the need to change."
From Facebook's perspective, marketers may no longer need or want affinity-based targeting solutions. Rather, they're looking for performance and engagement, which the company increasingly aims to fulfill through advanced targeting capabilities combined with enormous reach. The revolutionary idea of "word of mouth at scale," while not forgotten, is no longer on the front burner.
The company issued the following statement in response to the report:
Facebook acknowledges that its biggest complaint from advertisers and agencies is around the quality of service, an area it says it has taken steps to improve.