Are Facebook’s Marketplace ads a waste of cash?

That was one the many questions asked last month when General Motors beat a high-profile retreat from the Facebook ad platform.

But according to a report from marketing research firm eMarketer, General Motors had it all wrong: Facebook’s Marketplace ads do work, and plenty of advertisers can prove it.

Facebook’s numbers support the claim: Revenue from Marketplace ads accounted for $1.89 billion last year, topping the $1.26 billion from Premium ads. There may be concerns about their efficacy, but a lot of advertisers are still investing in them.

In spite of this, Facebook’s Marketplace ads get no respect, said eMarketer analyst Debra Williamson.

“We laugh at them because they don’t apply to us, or they’re poorly designed. They’re the ads we love to hate,” she said.

Click-through rates on Facebook Marketplace ads are abysmally bad, hitting as low as .034 percent by one estimate. Rates for Google ads, in comparison, come in at a little over two percent.

But focusing too much on click-throughs is a mistake, Williamson said. “The bigger deal  is what happens after the click,” she said. That’s a strength of Facebook, which offers a variety of ways for advertising technology companies to track engagement.

In a similar vein, Williamson said that highly effective advertisers look beyond fan numbers. “You want to attract the right kind of fans,” she said. These are the kind of fans that not only click, but share and engage.

This notion flies in the face of previous assumptions, which held that the more Facebook fans a brand had, the better off it would be. But advertisers are quickly realizing that a blind pursuit of Facebook fans isn’t an end-all solution.

“A lot of advertisers are scratching their heads on what to do with all of these Facebook fans,” she said. “So they’re pulling back.”

Another effective strategy might sound a bit brash, but it works: Just launch. In her interviews with companies, Williamson found that oftentimes the most effective strategy is to just let the advertising technology do the work. “You give up a bit of control, but  the results often pay off,” she said.

Speed is a key component prized by effective Facebook advertisers. Marketplace advertisements report results within 10 to 15 minutes, allowing advertisers to very quickly turn around and tweak their campaigns. This is a component that is sure to be come more prominent as Facebook launches its real-time bidding platform, Facebook Exchange.

Facebook isn’t off the hook, either. Williamson says that the company needs to better combine its premium and marketplace ad programs to make it easer for advertisers to track and manage both simultaneously.

Image: Shutterstock/RBilton