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. (more…)