Facebook’s road to its market debut hit a bump Tuesday when General Motors said it will stop paid advertising on the social network.
According to Forrester analyst Melissa Parrish, the move should be a wake-up call for the social network. Parrish has been hearing from companies who, like GM, have been dissatisfied with the way their ads are performing on Facebook for a while. She expects that others might look at GM’s move as validation of their own concerns.
Online marketing firm WordStream has an explanation for why Facebook ads may not be as effective as those from its top competitor, Google.
According to the firm, the size constraints Facebook places on ads, its lack of experience on mobile ads and the limited types of ads it can offer make Google a more appealing option. Google has more diversified ad media, thanks to YouTube, its search engines and the fact that it runs ads that appear on non-Google sites.
But where Facebook marketing excels is in community building and brand development, especially since the company can more closely target based on stated interests users have shared with the social network.
Executives from Ford and Subaru said Tuesday that they’ve found success by building Facebook campaigns that ask for user input and aim to build a conversation around companies.
In its July 2011 white paper, “The Power of Like,” media analytics firm comScore noted that it’s not necessarily direct fans but friends of fans that should measure the reach of a brand on Facebook.
“A Facebook analysis of the top 100 brand pages suggests that for every Fan, there are an additional 34 Friends of Fans that can be reached,” though this varies based on the brand. On the top 1,000 Fan pages, the firm found, this multiplier can grow to as much as 81 times. The paper looked at three companies — Starbucks, Bing and Southwest — in addition to taking a broad look at the state of social advertising.
The comScore study said that Facebook also has the unique opportunity to let fans influence their friends by sharing brand choices. In turn, the study found, that builds loyalty and generates incremental purchases.
According to the study, “typical approaches that focus on raw fan counts, or the total number of engagements on a given piece of content, fail to depict the potential and realized scope of social media brand impressions.”
However, as effective a tool as Facebook may be for marketers, much of that reach can be achieved through advertising on the social network without paying the social network a dime. Almost all of comScore’s data measures unpaid advertising methods and, of the three test cases, only Starbucks had social impressions that rivaled its display ad initiatives.