by Nestor E. Arellano
I’ve always approached my daughter’s budding Facebook Marketplace sales with light hearted indulgence. However she might have some real business sense after all.
Roughly two days before General Motors announced that it will no longer be advertising (that’s roughly $10 million worth) on Facebook; Hilary told me that she was pulling out her “jewellery and good stuff” from the social networking site because Facebook was simply not reaching the “right customers for her products.”
Mind you my daughter was not buying Facebook ads to market her cast off Rudsak skirt, shredded sweaters and home made gypsy halos. She was just posting photos of her clothes and accessories and hoping that word-of-mouth advertising among friends would do the rest.
Her concern was that Facebook was not reaching enough potential customers for her and that an actual online store would open up her products to buyers with more varied tastes.
As Tony Bradley reports, GM’s decision to stop using Facebook ads is not necessarily an indictment of Facebook advertising but rather that “it may just be the wrong thing to market on.” He argues that it’s the wrong medium for the auto marker to be in and that the type of experience sharing that goes around between friends and family in the social network does not necessarily lend it self to selling big ticket items like cars and trucks.
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While the loss of GM’s $10 million advertising account might not hurt Facebook much since it generates was able to generate $3.7 billion in ad revenues last year, there may be some more worrying developments.
Digital marketing agency Greenlight yesterday reported that in a survey of 500 people, 30 per cent said they “strongly distrust” Facebook with their personal data and that 44 per cent “never” click on Facebook sponsored ads.
When asked if they clicked on advertisements or sponsored listings, just 3 per cent of respondents answered “regularly” and 10 per cent said “often.”
The fact that 30 per cent indicated that they distrust Facebook with their personal data indicates that the social networking site has an “upward battle” with regards to selling its advertising program, according to Hannah Kimuyu, director of paid media at Greenlight.
“Facebook’s advertising program allows brands to connect with more than 800 million potential customers, through targeting their age, gender, location and interests, in other words – personal data,” she points out.
So, if you have a small business and have a Facebook ad campaign or contemplating one, you must be asking now: “Is the campaign worth it?”
For certain businesses, perhaps it’s to best view Facebook and other social networks as a channel for market exposure, brand penetration and community building and fan interaction. For some businesses Facebook is not the tool for making direct sales from ads.
But the site can deliver on exposure. A Global Facebook Advertising Report compiled by TBG Digital in Q2 2011, examined 200 billion impressions across hundreds of advertisers in 21 markets. The study revealed that retail delivered the highest click through rate (CTR) when compared to other sectors. Furthermore, retail saw the largest increase in growth, going from being non-existent in Q3 2010 to showing steady growth by Q2 of 2011 (a 36 per cent increase), according to Greenlight.
“Pulling this study back to Greenlight’s client base, we have seen similar performance levels, especially with retail getting more from Facebook,” said Kimuyu.
Some retailers and service providers might like to consider Facebook’s Sponsored Story and Comment ads features. The tools allow advertisers to post “conversation starters” to their Facebook page and entice their brand fans and other Facebook users to respond via commenting or sharing with their friends.
The format delivers, on average, a 32 per cent decrease in cost per acquisitions (sales) and an increase in CTR (engagement).
“When running both the traditional ad format alongside a sponsored story format, we tend to see at least a 30 per cent increase in conversion rates, again with retail leading across the sectors,” says Kimuyu.
The lesson here is that the old maxim, know your market still holds true. While 44 per cent of Facebook users say they will never click on sponsored ads in the site, ads that do find their mark pay big in terms of engagement.
