The recent IPO (“Initial Public Offering”) by social media giant Facebook has certainly generated quite a bit of buzz. There will be much discussion regarding the plummeting share price (as of the writing of this article) from the post IPO highs and possible Facebook shareholder lawsuits and SEC investigations. At heart of the Facebook valuation questions are whether the company can monetize many of its channels, namely mobile, going forward. Pertinent to many small businesses, including dealerships, is whether advertising on Facebook is worth the investment.
I will preface this discussion by saying that even if businesses choses not to ‘pay’ to advertise on Facebook, by placing ads on the site, their decision to post content to their businesses’ Facebook accounts has associated costs. There are costs of creating the content posted and compensating employees to manage their businesses’ Facebook presence. Even if this responsibility is included in the employees’ job description, business owners still have to consider the ‘opportunity cost’ associated with having employees dedicate time to generating content on Facebook. That time may be spent better in other avenues, depending on the circumstances.
There is an interesting discussion going on at Automotive Digital Marketing initiated by Keith Shetterly. Titled, “GM is “Dot Dumb”…Again,” Mr. Shetterly takes GM to task regarding its recent decision to suspend paid advertising on Facebook. His criticism sums up nicely the view of proponents of paid advertising on Facebook; that Facebook, with its huge user base and ample opportunities for engagement, is too big to ignore. In GM’s defense, their decision to suspend paid advertising on Facebook did not mean that they were abandoning Facebook altogether. GM still plans to spend millions of dollars to generate content to post to its brands’ Facebook pages.
Another camp believes that paid advertising on Facebook is incredibly ineffective at generating leads, in comparison to Google pay-per-click (“PPC”) campaigns. Some of that argument is expressed here. If anything, they say, Facebook is best for ‘institutional advertising’ and not for lead generation.
What are your thoughts on paying for advertisements on Facebook? Can Facebook be an effective lead generator, or is it better as a top-of-mind awareness tool used early in the shopping cycle?