February 4, 2012

With 845 million users, Facebook is the world’s social media juggernaut. According to the company’s recent IPO filing (and Wall Street Journal reports), it made $1 billion off $3.71 billion in revenues, and 85% of those revenues came from advertising.

That’s why I think the most amazing Facebook factoid is that they have convinced thousands of companies that spending money on Facebook is a good marketing investment. The pitch: Investing in Facebook will build legions of loyal customers that “like” you, want to hear from you daily, and want to buy your products or services. Well, that is simply not true. There is no solid research that shows that Facebook is driving any website traffic or sales revenue. I have one client, which now has 12,000 likes, and they only get .003% of their website traffic from Facebook.

You can thank David Fischer, the company’s vice president of marketing, for doing a masterful job of selling Facebook to your company. A 39-year-old former Google Inc. executive, Fisher’s newest tool “Sponsored Stories,” is really brilliant.

These “paid for posts,” which used to show up on the right side of the screen along with Facebook ads, now are in the middle of the News Feed – along with posts from your friends. Talk about breaking through the clutter. Fisher believes that Sponsored Stores are more relevant because they come from a friend and are taken more seriously than, say, a TV commercial. If you aren’t using Sponsored Stories, you should. If used correctly they can create a word-of-mouth campaign that could reach millions.

Bottom-line: While I still question the revenue generating power of Facebook, it can be a powerful brand builder, and Sponsored Stories and Facebook ads have to be tools in your marketing arsenal. Of course, that’s until Fisher overloads the ad system and 845 million users say, “That’s enough, give me my friends and relatives back.”

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