Four out of five Facebook users, a survey shows, have never ever bought any product or service as a direct result of comments or advertising on the popular social network. The online poll showed that 34 percent of users of the site among those surveyed were now spending less time on it than six months ago. On the other hand just 20 percent of them were spending more time.
The just released Reuters/Ipsos poll points to the fact that perhaps much more work needs to be done on part of Facebook in order to turn its whopping 900 million user base into tangible advertising returns and revenue.
- The new findings in a way underscore worries of Facebook investors regarding its money-making abilities, which have pushed the market value down by close to 30 percent (by $30 billion) since its initial public offering, reducing its total worth to roughly $74 billion.
- About 44 percent of those surveyed said the market debut, perceived by investors as a troubled one, has turned them less favorable toward the site. In the poll of 1,032 respondents in America, 21 percent revealed they did not have a Facebook account.
- The survey didn’t ask how other advertising forms impacted purchasing behavior. Incidentally, an earlier study done by eMarketer indicated that the site fared poorly in comparison to email or direct-mail marketing when it came to influencing consumers’ purchasing decisions.
eMarketer analyst Debra Williamson stated that Facebook has some work to do in for making its advertising proposition more effective and more relevant to users. Such concerns became exacerbated when General Motors, the third largest US advertiser, announced last month it would stop paid advertising venture on Facebook.
Facebook thinks otherwise…
Facebook refused to comment on the survey, but referred to specific case studies of companies like Nutella that attributed a 15 percent increase in sales to Facebook, as well as restaurant chain Applebee’s, Its Facebook ads reportedly delivered an impressive threefold return on investment.
Of course, measuring apparent effectiveness of Facebook advertising can get tricky, for brand marketing particularly in which the aim is to influence future purchasing decisions rather than generate direct and immediate sales. An ad campaign’s success must be seen in relation to the product, point out media and advertising experts. The president of Nielsen’s Global Media Products & Advertiser Solutions division, Steve Hasker, mentions: “If you’re advertising Porsche cars and you can manage 20 percent of users to make a purchase then it’s an astonishingly higher conversion rate, whereas if you’re selling instant noodles, perhaps it’s not.”
Until this point, the network’s huge audience has made it one of the most popular destinations online, challenging entrenched Web players like Google. Not everyone though is convinced that the company has still figured out ways of translating that popularity into a business model so as to meet its lofty valuation.