One would assume that a behemoth Web entity like Facebook, with millions upon millions of dedicated users logging in daily, would not have an issue attracting advertising dollars. Yet that very scenario is beginning to play out, and at a very inopportune time for the company.
Facebook has recently been saddled by a Reuters poll that showed 80% of users paid no heed to any of the advertising cluttering their screens. This followed the well-publicized loss of General Motors, who pulled their advertising on Facebook, saying it simply did not work and that their fans had made it clear they don't like Facebook ads as a matter of principle, and pay them no mind as a result.
The sagging trust in the efficacy of Facebook advertising is one of the reasons Facebook's stock has been brutally battered since its initial public offering May 18, shedding over 25% of its listing price of $38 in the weeks since.
Not surprisingly, Facebook has gone on the offensive in defense of the value it provides to advertisers, teaming up with comScore to release a jointly researched paper on Facebook advertising, 'The Power of Like 2: How Social Marketing Works'.
The results of research involving 60 of their biggest advertising partners, conducted in 2011, showed a return on investment for those companies of three times the amount of advertising dollars spent on their campaigns, 70% of the time.
The major point of contention one could take with the report is that it often muddies the waters between the ads themselves, which cost money, and general branding through Facebook, which doesn't, and which no one, including GM, is disputing the effectiveness of.
It serves Facebook well to state these two go hand-in-hand, yet there's not a lot of data showing how effective the actual ads themselves are. Instead the report largely cites brand exposure, and how it increases purchasing rates, as opposed to anything specifically related to ads, which have notoriously low click-through rates on the social giant's site.
The report, in conjunction with a trusted name in online advertising analysis, should help stem the tide of bad publicity that has crashed against Facebook's shores in recent weeks. While by no means definitive, it does make a strong case that advertising through Facebook is worthwhile, and having a presence on the site even more so.
