As stock price dips, industry players assess the future of the social site.
With Facebook's IPO in the books, industry players are weighing in on what the events of last week meant. Not surprisingly, some are still putting into context the potential ramifications of General Motors significantly cutting back on Facebook ads.
Addressing the GM situation, Gerald Hensel, Strategy Lead at Blast Radius, a WPP-owned digital agency, told ClickZ, "Currently most companies do not use Facebook targeting effectively and creatively enough. If you want to build a community on Facebook, there is no way around Facebook media buys."
GM's statement certainly hasn't helped Facebook's stock price, which has performed below expectation after two days of trading. Some industry pundits have opined that Facebook's IPO, which endured a Nasdaq software glitch while going to market on Friday, signals a looming tech bubble.
How would a failed Facebook affect the overall digital advertising ecosystem?
"[Digital advertising] is going to survive and thrive with or without Facebook," said Dave Martin, SVP of Media at El Segundo, CA-based advertising firm Ignited. "The growth of digital video consumption online and on connected TVs is opening up an entirely new option for big brand advertisers. And the amount of time consumers are spending on portable devices like tablets and smart phones is also going to get a lot of attention from advertisers, independent of what happens with Facebook. I do think that Facebook is becoming a more and more important part of the marketing mix, but that doesn't necessarily equate to more advertising dollars."
Martin said agencies that have significantly invested in Facebook ad technologies and talent could be hurt if the social site's paid promotions prove to be less valuable than ads via other channels. "And agencies that collect big margins by arbitraging 'likes' could also run into trouble if clients can't effectively convert those 'likes' into revenue," he said.
Social Feedback: Ford, Nutella, And WPP 'Like' Facebook
In terms of whether or not GM's move last week was a proverbial canary in the coal mine for Facebook, there have recently been developments in the opposite direction.
For instance, Ford last week said it's still bullish on Facebook ads. Nutella earlier this month told ClickZ that its Facebook ads for a 2011 holidays campaign provided better ROI than any other channel. And WPP CEO Martin Sorrell said in late March that his holding company may spend $400 million on Facebook ads during 2012, doubling what it bought last year on the social site.
Meanwhile, Buddy Media appears to be a benefactor from the big spending increase referenced by Sorrell. WPP property Group M today announced a technology partnership with the New York vendor, planning to employ Buddy Media's buying platform to make it easier for clients to purchase ads on Facebook and other social networks. Though not exclusive, the deal will affect Facebook buying across WPP media properties such as Mindshare, Maxus, MEC and MediaCom.
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Christopher Heine was a senior writer for ClickZ through June 2012. He covered social media, sports/entertainment marketing, retail, and more. Heine's work has also appeared via Mashable, Brandweek, DM News, MarketingSherpa, and other tech- and ad-centric publications. USA Today, Bloomberg Radio, and The Los Angeles Times have cited him as an expert journalist.
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September 23, 2014