Frustrations with the Facebook IPO Controversy

There’s been a lot of talk about Facebook as the company prepares for it’s IPO. Many are questioning the value of Facebook, saying the social media site is just a fad. Others are claiming the site lacks a successful revenue steam. Those arguing this increased their cries as GM announced it was no longer running Facebook advertising, claiming the ads had little impact on their consumers. The news was a $10 million per year loss for Facebook, and perhaps even more as brands begin re-evaluting their Facebook ad effectiveness.

I hate to say this and bring my own personal opinion into the matter, but I am a little frustrated at the comments surrounding the questioning of Facebook’s advertising. Many have posted comments saying they have never clicked on a Facebook ad themselves, and there was even an article comparing Facebook ad performance against Google ad performance. As a marketer, I am surprised as these comments and would like to point out a few things regarding Facebook ads.

1. Search marketing is not social display advertising. Comparing the two is not comparing apples to apples. Search marketing performance is a lower-funnel tactic, capturing people who are in-market since they are actually searching for something. Social display advertising is an upper-funnel tactic, developing relationships with consumers and forming opinions. Obviously, a lower-funnel tactic is going to out-perform an upper-funnel tactic.

2. Facebook ads generate brand awareness and engagement with consumers. This is especially true of ads that drive Facebook likes and provide brands with earned media via an increase of followers of their page posts. Other forms of ads cannot provide this type of earned media or interaction. Can you talk with brands through your TV? In a search ad? In a display banner? No. Only through Facebook can you get almost as close to brands as you can. People live brands through Facebook. People engage with the content. They share posts by brands. They comment on photos from brands. They provide suggestions to brands. What’s the best way to drive users to your brand page? Facebook ads. They’re right on the site. They have a like button. They’re easily targeted. They perform well.

3. Without brand awareness, you won’t see sales. Period. Think of any major brand: Tide, Pampers, Milky Way, or Pepsi. What makes you recognize these brand names? Advertising. Without advertising, these brands would remain unsold on brand shelves as consumers choose products which whose names they know and have heard of. Are you going to purchase a brand you haven’t heard of on the shelf over one you have heard of? No. You want to purchase something that you have positive or neutral expectations of, not one that you don’t have any prior knowledge of.

4. Facebook is just one site. Brands move their advertising dollars around all the time. At the end of the day, Facebook is just one site. Comparing it to other networks such as Google or Yahoo just doesn’t make sense. Though it has the traffic, the traffic on Facebook is going there for social networking. On Google, users are on the site to search, check their mail, see photos, and participate in a handful of other online activities. As Facebook expands, especially into gaming, this will change. For now, however, Facebook is just that- Facebook. One site, with lots of visitors and lots of potential.

5. Facebook is a data owner. And it’s scary. Think of everything Facebook knows about you that other sites don’t. It knows your friends. It knows who you talk to day in and day out. It knows who you trust. It knows what you did Friday night. It knows everyone you’ve ever dated. It knows what games you like to play, what photos you like to share, and what type of posts you like. With extensions outside of Facebook itself, it even knows things like what articles you read on news sites. In the right hands, Facebook knows you better than you know  yourself. It’s scary. And it’s where the goldmine is at.

As a marketer, I may be a biased to Facebook advertising. With the amount of success brands and small businesses have seen from them though, I really believe in them, and I hope you’ll at least take a taste of the Facebook pie.

-Bryan Nagy