The most interesting part of the study is the timing. It comes on the heels of the Facebook advertising fiasco, when just days before its hotly anticipated IPO, General Motors said it would stop advertising on the social network, raising the question of the value of a Facebook ad.
The lure of online advertising has always been the promise of immediate and precise information (in theory at least) about how an ad worked. In industry speak, it is referred to as ROI– return on investment.
Google and Facebook are fierce rivals for online advertising and part of the reason for Facebook’s astronomical valuation (yes, even though its IPO was widely considered a flop) is the promise of it sucking up more ad dollars down the line.
This morning Ad Age reported the back story of GM’s pullout from Facebook, underscoring the tensions between big advertisers and Facebook’s willingness to appease them. GM wanted to do something much splashier with Facebook; Facebook declined. GM took its money elsewhere.
What’s more is that Ad Age’s Cotton Delo cites Aegis Media Americas CEO Nigel Morris, who said that while Facebook is an appealing place, with a membership of 900 million worldwide, demonstrating the ROI is a problem: “The issue fundamentally [is] within the confines of the platform; will it be able to grow advertising as fast as it needs to?” Morris said. “And it’ll depend, as it does in all media, on showing how effective the platform is and demonstrating the ROI, especially in a world where more and more options exist for brands to engage with consumers. There are more options but fewer scalable ones.”
