Facebook, the world’s largest social network, achieved 1 billion users in September 2012.  Why then, would anyone opt out of advertising with a company that has captured the attention of such a large percentage of the world’s population?

That decision was made by General Motors (the third largest advertiser in the U.S.) this past May, when the company pulled its ad campaigns from Facebook (Washington Post).  GM found that in the end, their $40 million spent on advertising with Facebook was ineffective. (Wall Street Journal).

In response to GM’s move, Ford affirmed their beliefs in Facebook advertising by tweeting, “It’s all about execution. Our Facebook ads are effective when strategically combined with engaging content & innovation.” (Business Insider)

User engagement is the name of the game and it is why Facebook is implementing a new style of advertising called “social advertising” which has the potential to make Facebook ads more effective.

The Old Style of Facebook Advertising:

• In the past, the effectiveness of traditional advertising has been measured by the number of clicks an ad receives, otherwise known as a Pay Per Click model.
• According to Forrester, a global research and advisory firm, Facebook took in about $4 billion in ad revenue in 2012 by using traditional online display ads.
• Clients can target Facebook ads to specific user demographics based upon user location, age, interests and a variety of other traits. (Wired)

The Future of Facebook Advertising

• Facebook is moving towards social advertising; advertising that would not be possible outside of a social network. (Wired) For example, a “sponsored story” may come up in your news feed if a friend interacts with an advertisement by “liking” or mentioning it.
• Facebook has teamed up with Datalogix, an advertising metrics company that has figured out how to track your offline purchases back to your Facebook profile. Datalogix can show how effective Facebook ads are even if users do not click on them.
• According to Wired, Sanford Bernstein analysts Carlos Kirjner suggest that Facebook’s ad revenue could increase by as much as $33 billion if disruptive social advertising reaches its full potential on the site (Although, Wired reports there is a 1/5 chance Facebook will achieve the full $33 billion).

It is not yet clear whether or not disruptive social advertising will bring back an advertising powerhouse like GM. However, it is certainly something all current and potential Facebook advertisers should look out for.

As professional marketers who are on the cusp of marketing trends, we quickly experienced the hits and misses of using social media, specifically Facebook, to spread the word and generate return on investment (ROI) for our clients.  It’s clear that this is not a passive means to promote one’s message or brand.

Just as the users are finding new ways to express themselves on Facebook almost daily, Facebook is finding new ways to put a brand’s message in front of the users and for a price, to the marketer. It’s important to note that price is quickly increasing, both in placement cost on Facebook and in the time it takes the professional marketer to keep up with the opportunities and message relevance to the Facebook user and the client’s brand.

Is this generating ROI? That depends on the results desired. Facebook is still adamant that price and offers are not part of the “social content”  they want in our newsfeeds.  Though you can still promote offers in the right-hand ad side. Which, by the way, currently does not show up on mobile and most tablet devices or apps, but as of yesterday, industry chatter indicates this may become a possibility in the very near future (BusinessWeek).

If the ROI you desire is brand or product awareness and Facebook page engagement, then you can successfully achieve that goal with strategic execution.  If it’s actual sales, that takes a bit longer to see at the cash register and the commitment is more closely related to that needed for traditional media — it becomes a matter of time and money to generate results.

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