Ever since Facebook’s IPO, the social networking company has faced a lot of skepticism regarding the sustainability and even effectiveness of its advertising model. Some observers have weighed the social network site against Internet advertising giant Google and found Facebook wanting. Some have even likened advertising at the social networking behemoth to posters at a cafe while you talk to your friends-nice to look at but not really the main reason why you came to the cafe in the first place. Compared to search advertising, the conventional wisdom goes, social network marketing is much more shallow and less targeted. In other words, it is deemed to be less effective. Indeed, big time clients like General Motors have either pulled their advertising campaigns or dialed them down. Of course, all this concern about Facebook’s advertising effectiveness have not done its stock price and long term investment potential in the eyes of many investment houses any favors.
Amid all the skepticism about Facebook’s business plan comes a ComScore advertising study that suggests that the Facebook’s ads might actually be quite effective. Released last Tuesday, the report tracked FB users who were Target and Starbucks fan page fans. The market research firm found that users who were fans or their friends showed a higher likelihood of buying than users who were not fans. FB users become “fans” when they click on the “like” button of any particular fan page. This enables the fan page’s updates to show up on the news feed of the page’s fans.
The numbers are nothing to sneeze at For example, Starbucks fans are 38 percent more likely to make a purchase within the next four weeks after they are exposed to the company’s message. In the case of Target, the general retailer experienced a 21 percent boost within the same time frame. ComScore’s report followed an earlier report where the firm said that Facebook’s growth rate is slowing down.
While this might seem like good news at first brush, if we apply a little logic to this study’s conclusion, we are left with a big question mark. The logical issue here is whether the people who “liked” the Starbucks fan page are Starbucks patrons already. In essence, are they “self-selecting” or are they truly “fresh converts” to the brand? Moreover, what incentives or premiums were used to get people to “like” the page? Although the report does seem like a glimmer of hope for Facebook fans and investors alike, we believe a more thorough study with tighter control methodologies would shed better light on the puzzling question of whether Facebook’s ads are truly effective.