This quotation from a Facebook advertiser summarizes the difficulty Facebook will face in maintaining market value as a public company.
“We still don’t have a huge correlation between Facebook fans and return on investment in an actual sales in store. Until that metric becomes a lot more solid, I don’t think our company or other brands are going to be full-fledged into Facebook advertising.”
The penetration of Facebook is obviously impressive. Yet the revenue per “like” or per user is so small as to be insignificant. I think it could be years until Facebook users are actually influenced by paid advertising in a way that has significant meaning to businesses.
In my specific industries (accounting, private health insurance and online financial services) the disconnect between Facebook and advertising revenue is even more pronounced. We may be several decades away from the time when any significant number of Facebook user profiles meshes with the demographic of our customer profile (wealthy individuals, business owners and executives in their mid-50s to mid-60s) and it seems difficult to imagine a scenario where other forms of marketing would not be more effective.
quotation from “Facebook Seeks More Paid Ads” – WSJ.com on 2/3/12