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Facebook advertising: a boost or bust for business?

Can Facebook capitalize on social-marketing?
Can Facebook capitalize on social-marketing?
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Status updates and jealous-making vacation pics aren’t the only things vying for your attention on Facebook. Just over to the right, Zappos is offering markdowns on the latest sandals and The W Hotels has sample beds on sale. But do you ever click on those ads?

Most Facebook users probably say no. But Facebook Inc. is touting a new study they claim shows that advertising on the social networking site is effective. Perhaps the company is trying to boost its status on Wall Street, after its botched initial public offering. Last year, Facebook made most of its $3.7 billion in revenue from advertising. But it has a long way to go before it can justify its stock market value of about $58 billion.

Marketers “like” the site’s 1-billion users, which translate into 2-billion eyeballs, in marketing parlance. But do those ads really pay off for companies? General Motors, for one, has its doubts. The automotive behemoth, which is the third-largest U.S. advertiser, recently announced it’s yanking its Facebook ads.

Will other big companies follow? Is online marketing failing to live up to its purported potential? If people aren’t clicking through, might the ads still be working subliminally? Or are they just expensive and annoying?


Andrew Rohm, Associate Professor of Marketing at Loyola Marymount University. He teaches a specialist class in social media marketing

Mike McGuire, Vice President of Research, Media Industry Advisory Services at Gartner - an information technology research consultancy