Yesterday General Motors announced that they will no longer use Facebook to market their products. The reason they gave is that social marketing on Facebook has not generated any expected sales for them. GM has refused to believe that social networks like Facebook really work when it means business.
Big Question….. Is Facebook really worth that $100 Billion that is claimed to be? after their first IPO?. After all 70% of this worth is calculated based on the projected advertisement revenues it is assumed to generate from companies who would potentially put their ad on Facebook and pay Facebook for it. Does the social network marketing really work or it is just a hyped bubble that is waiting to burst soon?.
The valuation of Facebook at $100 Billion is also based on the believe that it would help businesses to enhance their sales based on social buying power via Facebook. The idea is, if someone who uses Facebook, likes a certain product from certain company and buys it, it is very likely that his Facebook friends are also likely to buy the same product based on that friend’s experience . It is thus assumed that when they see it advertised on their Facebook page, they are more like;y to visit the product page and may possibly buy it. Trusting a friend’s buying experience plays the key.
But there are some drawbacks of this idea. For one, not all people have the same taste. Even with close friends, the tastes vary widely. It is not necessary that what I like, my friend will probably or definitely like it. Second, most people who use Facebook and social networks , use them for keeping in touch with friends or just to have fun, sharing jokes and stories. It is a serious question as to how many of them really look at any advertise at all, unless it is some deal that is true to believe. Many companies advertise saying if you like them on Facebook, they will get such and such product for free. Well, many do like them , they do get the deal, then what?. They go back and unlike it again, and then forget about it after they have got what they wanted. Where is the scope to go back and buy that product at regular price or other product from that company again?. If someone asks me, I would say, I want to see my Facebook personal page clean, without any ads, without several companies shown that are liked. I don’t bother what ad is displayed or which company wants me to like them. I believe this is general mentality of many people who use Facebook. This leaves little scope for companies who advertise to get people to visit their company product site or store. Over that, with widely circulating news that Facebook and other such social networks not serious in keeping user data private, people will be hesitant to click on any ads on the page with a fear that it would let their Facebook data pass on elsewhere via the ads. The whole idea of social marketing , using social network for ads and sales is really questionable.