(Photo credit: Wikipedia)
In the weeks since Facebook’s IPO, the Zuckerberg-lead social network has been under intense scrutiny, with many expressing doubts as to the financial viability of Facebook’s revenue model, especially with regard to its advertising service. GM pulled their Facebook marketing campaign, and music industry e-commerce startup Limited Run made an impact with their claim that 80% of the clicks for their (although the jury is still out on the accuracy of that complaint). A study from the Advertising Research Council claimed that “blank” ads with no content were performing only 0.1% less well than regular ads.
While this news is not good for Facebook’s future revenue, and businesses should think hard before spending their advertising budgets on Facebook’s paid ad platform, the real value of Facebook and social media generally was never through paid ads anyway. The true virtue of social media is not that it increases short-term conversion rates, but that it allows brands to build engagement and foster a community that can have a significant impact on revenue over the medium and long term. In this area, the future of Facebook is much more robust, and the indications are that social media proper, rather than paid ads on social media, are an excellent target for marketers.
In a recent study, Performics surveyed 2000 Americans about their use of social media. As might be expected, the study shows that there has been a shift social behavior patterns, with many people stating that they much prefer interaction on social media to real-time interaction like phone calls. In fact, 40% said that they feel more comfortable interacting with people online than in person.
When it comes to brands, the study reveals some figures which help explain why paid ads are doing poorly compared to direct social interaction. We’re all aware of the not very impressive CTR and conversion rates for paid ads. Compared to this, a third of survey respondents said that they were most likely to respond to brand offers when they are reposted by a friend, and 27% will do so on a brands page. Diana Middleton, the CEO of Performics, notes that millennials in particular, but also 30-something families and baby boomers, are firmly embracing the Participant Age, which means that they expect communications to be ongoing and reciprocal. They are conditioned to respond better to social media interaction than traditional advertising.
Have your experiences with paid advertising on social media been positive or negative. How do they compare to customer engagement through your Facebook brand pages. Let us know in the comments below or on Twitter.
