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Why GM and others fail....ing F acebook

Why GM and others fail.....using F acebook. By: Matt Jorgensen. Event Breakdown. GM announced it would cease advertising on Facebook just days before company’s IPO. $10 million in annual spending Cause others to wonder if Facebook business model is flawed.

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Why GM and others fail....ing F acebook

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  1. Why GM and others fail.....using Facebook By: Matt Jorgensen

  2. Event Breakdown • GM announced it would cease advertising on Facebook just days before company’s IPO. • $10 million in annual spending • Cause others to wonder if Facebook business model is flawed. • Made 85% of its $3.7 billion in revenue last year from little ad boxes.

  3. Event Breakdown • Most Facebook ads are bought on a cost-per-click basis. • Keeps front-end costs low; usually less than 2 dollars per click. • So…by getting only 1 percent of those who did click on ads to “convert” and buy a product, you have achieved a $200 cost per sale. • This gave rise to four challenges regarding Facebook

  4. Facebook Challenges • 1) keeping conversion rates high and acquisition costs low. • Conversion rate: portion of people who eventually buy after clicking on ads. • Requires constant battery of audience-targeted refinement, creative testing, and website adjustments. • Difficult to track all the consumer respondents who came in via Facebook.

  5. Facebook Challenges • 2) Struggling to reap value from social interactions. • “liking” a brand opens the door for engagement between brand and consumer. • Also leads to the content popping up again in users stream. • Idea is to move away from interruptive advertising and become a real “friend” of the consumer. • “Likes” are becoming a devalued currency

  6. Facebook Challenges • 3) Maintaining coherent conversations with users AFTER they are liked. • Author tested 12 big brands (Apple, Bank of America, Starbucks, and others) to see how they would respond. • On average, the brands he liked engaged .6 times in 1 week. • That’s WEAK!

  7. Facebook Challenges • 4) Personalizing brand interactions. • Currently brands respond with a one-size-fits-all promotion. • University of Phoenix, teaching certification. • Are you paying attention to the little ads? Do you even notice them? • Who here has bought something because of an ad they saw? • Is brand-consumer engagement something you want in your Facebook account?

  8. Sources http://www.businessweek.com/articles/2012-05-22/why-gm-and-others-fail-with-facebook-ads#p2

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