Yes, we’re going to talk about how Facebook is overvalued. . . . again.
This time, it stems from a Reuters/Ipsos online poll about Facebook usage. Right off the bat, they found that 34% of those surveyed were spending less time on the site. 20% said they were spending more time. Hang on while I do the math (34 minus 20, negative sign, percentage), yep, that still equals lost eyeballs.
It doesn’t stop there. Seems that Facebook’s stock troubles has made 44% of the respondents think less of the popular social media site. Now, I’m not a huge fan of the company, but I don’t think they’re directly to blame for the dropping stock prices. It’s not their fault that everyone believed the hype.
But getting back to the topic at hand, here we have 4 out of 5 users saying they’ve never made a purchase because of a Facebook ad or comment. Ad, sure. Comment, worries me. For marketers, Facebook is all about sharing and word of mouth. I understand a person’s reluctance to click on those badly designed ads in the sidebar. But I sure am hoping they’ll follow through when their friend says they enjoy the product I’m selling.
In the interest of fairness, the journalist who wrote the article for Reuters asked Facebook to comment. They declined but pointed them to case studies that showed a big return on investment.
Counter that with General Motors, who recently pulled their 10 million ad budget. They’ll continue running Facebook Pages though, because those are free. Which brings up an interesting point. What if Facebook made big companies pay for theirPages? They are giant ads, after all. If GM wanted to put a full-page ad on any other high-profile website, it would cost them plenty.
To me, this has always been the odd thing about Facebook marketing. The ugly, easily-ignorable ads in the sidebar cost money. The delightful, full-color, interactive pages are free. Where’s the logic?
Not that I’m wishing Facebook would charge for Pages but from a business standpoint, it’s the only thing that makes sense. This is especially true now that more and more people are using the mobile app which leaves little room for ads.
So who do you believe? Facebook says their ads work just fine, Reuters says they don’t work and their survey has a “credibility interval of plus or minus 3.5 percentage points.” I don’t know exactly what a “credibility interval” is, but it sounds really smart, so Reuters gets my vote.
Whose side are you on?