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Facebook’s relationship status with its investors and advertisers might have changed to ‘Its complicated’ but are we reading too much into it, a little too soon?
July 30, 2012 2:33 by Priyanka Pradhan
Facebook survived the crushing disappointment of the epic fail that was the IPO, but now with the company’s announcement of net losses amounting to $157 million dollars in Q2, even the most die-hard fans of Facebook have begun to ‘unlike’ the new status of the company.
Apart from the growing doubts from marketers about return on investment (ROI) from social media marketing and advertising, the company has had to deal with losing one of its biggest clients earlier this year. General Motors cut off advertising revenue worth $10 million for Facebook and did even more damage by publicly announcing that Facebook ads don’t pay off.
It sounds like a classic Shakespearean tragedy chronicling the rise and fall of one of the world’s most famous brands. Except that it isn’t.
If the purpose of advertising is to give exposure and visibility to brands, few other platforms can compete with Facebook’s consumer base of 955 million, which has been finely segregated according to likes, tastes and behavior, for brands to fine tune and reach specific target audience. It’s no surprise then, that brands in categories varying from dishwasher liquid to luxury cars to the grocer next door have benefitted from Facebook ads. The SME and local business communities have especially gained from advertising on this cost efficient and tailored social platform in a way that they could never gain from TV, print and even digital advertising on other websites.
In this light, GM’s withdrawal of advertising spends on Facebook was probably due to internal factors, which the company may or may not have been happy to share with the public.
However, the ROI from “engagement” on brands fanpages is still questionable, but that’s a different argument altogether.
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