learnthe4ps.com - For students of marketing.

With Facebook going public this week, there is a lot of talk about whether its advertising works. Since the social network’s valuation is based on an uncertain business model, that is a good question. But we are not here to evaluate the worthiness of the investment in the stock — instead let’s look at whether Facebook ads make sense for marketing managers.

GM offers one answer to that question in “GM Says Facebook Ads Don’t Pay Off” (Wall Street Journal, May 16, 2012, non-subscribers click here). A case study reported by NPR found equally dubious results – “Pizza Delicious Bought An Ad On Facebook. How’d It Do?” (Planet Money Blog, May 16, 2012).

To answer the question in the headline, you should recognize the various ways a brand can use Facebook.  Marketers can create a Facebook fan page and invite customers to “like” the page. After liking the page, posts to that page appear in that person’s news feed. The cost to the marketer is to create the page and keep it up — but there is no media cost. There is also no revenue to Facebook, so the firm has developed other types of advertising. In theory and probably some time in the future, Facebook knows so much about users (through elaborate analysis of likes, posts, photos, the user’s network, etc.) that it can target customers.

Do you ever click on Facebook ads? Have you “Liked” any brands?  Do you read brand posts in your news feed?  What messages appeal to you? Why? What can Facebook offer advertisers?

Getting back to the question in the headline — the jury is still out. Time will tell, and the value of Facebook stock will likely follow.

I recently gave a talk at Colorado State University’s Future Visions program titled, “Marketing and Social Media: Creepy or Cool.” As I prepared for my presentation, I was surprised to see that some marketing practices I thought were years away — are being practiced now.

For example, did you know that Facebook apps are gathering data about users and user’s friends? You can read more about this in “Selling You on Facebook” (Wall Street Journal, April 10, 2012). Looking ahead, you can be sure that Facebook and Google are developing techniques for mining many types of data — everything from your “likes,” gender, and political leanings — to your status posts and photo stream. Facebook wants to be able to anticipate your needs — so that it can help marketers address those needs. Yes, that is the reason the company is worth $100 billion.

What do you think of this practice?  Are you concerned about these apps taking your private data — or your friends’ data?  Do you look forward to marketers having this information about you — so they can better serve your needs?

Who is the target market for this Toyota Venza commercial?   What is Toyota’s objective?  Does this ring true to you?  Would it ring true to your parents?

Marketers have always been excited about the idea of turning consumers into powerful Promotion tools for their brands — but fostering word-of-mouth isn’t easy. Now Facebook is hoping they have a strategy that makes it easy for consumers and marketers to work together to promote brands and products we “like” (as in pressing the “Like” button on Facebook).

No one is quite sure where this is going, but many consumers are already clicking the Facebook “Like” button on their favorite brands — or maybe mentioning in a post a recent purchase of the brand. Now it seems that Facebook will mention this ads targeting that customer’s friends. So for example, if I “Like” a brand like Ikea on my Facebook page, an ad could appear on my friends pages that mentions “Joe (and perhaps more of their friends) Likes Ikea.” In theory, knowing that Joe likes Ikea may make the store more appealing to my friends. This short article at Fast Company suggest that Facebook’s sponsored stories work – see “Facebook Sponsored Stories Performing 2 Times Better Than Standard Ads” (July 15, 2011).

What do you think?  Will you be more favorable to a brand if you know that 10 of your friends like it too?  Does it both you that your “Likes” might appear on your friends page as ads?

Or maybe, like most companies, a bit of both?  Facebook’s image has always bounced between good and evil. Privacy advocates have complained about the company. It turned out that most users didn’t much care about privacy. “The Social Network” did not paint a very pretty picture of founder Mark Zuckerberg. Then along comes some positive press — this week’s Bloomberg Businessweek cover story lauds the company’s COO and #2 in “Why Facebook Needs Sheryl Sandberg,” (May 12, 2011).  Bad timing for Sandberg — now Facebook is getting bad press for more bad actions “Facebook Admits It Hired PR Firm to Smear Google” (Adweek, May 12, 2011).

Yikes, lots of stuff here. The Sheryl Sandberg story in BusinessWeek provides a neat profile of the COO and gets you up to date on some Facebook initiatives — like advertising and whether the firm should enter China.

Perhaps the more interesting issue is the ethical lapse by both Facebook and its PR firm.  Makes you wonder who came up with the idea.  But if you are a PR firm and Facebook asks for this help — do you comply?  What could you tell Facebook?

As social media began to attract more consumer eyeballs, marketing managers were confused about how to deal with it.  Now some best practices are emerging. Marketing managers have a better idea about which marketing objectives different types of social media might help achieve.  This article, “Are You Talking to Me?” (Wall Street Journal, April 25, 2011, non-subscribers click here) suggests five best practices used by companies with some success in social media. Many of the lessons come from “listening” closely to customers via social media. The early heavy users of social media are listening, learning, and adapting.

What marketing objectives do you see social media working best to achieve?

Branded content ties a brand to some form of entertainment or useful information. It goes beyond sponsorship because typically the content is “found” when customers search online — or it is passed along to friends (think viral ad).  Levi’s offers an example of branded content; it brought rock band Nada Surf live to the Levi’s Facebook page. Levi’s picked up 45,000 new “Likers” with the promotion. As you may know, after a Facebook user indicates they “Like” a brand, the brand’s content appears on the user’s Facebook news feed — and can be seen by the user’s friends. Read about it in “Levi’s Rocks Facebook With Branded Content,” (ClickZ, October 29, 2010)

As a consumer, what do you think of Levi’s efforts?  Is this a way that might win your loyalty?

Many moms can relate to this story – “Mom always does her very best. But, face it, motherhood is never easy.” Consequently, many are likely to enjoy the video — and pass it along to their friends. I like the idea of a more targeted viral video. It also fits into a campaign by 8th Continent that you can find at the brand’s Facebook page.

What do you think are 8th Continent’s promotion objectives with this campaign?  Do you think it will work? Will it help 8th Continent build awareness and sell more soy milk?

What about you?   Do you trust advertising more — or recommendations from friends?  According to a survey conducted by Nielsen last year — 90% of peole surveyed trusted recommendations from people they know — versus 62% trusting TV ads, and only 24% trusting text ads on mobile phones.

Facebook hopes to capitalize on people trusting recommendations from others they know.    This recent Wall Street Journal article “Facebook Touts Selling Power of Friendship” (Wall Street Journal, July 7, 2010 – subscription required click here for a back door link, follow the search results). The video is 6:52 long, but the part on Facebook is in the first 3:30.