Hey Facebook, Where’s my ROI?
Matthew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As someone who works in a small business, I’m forced to wear many hats and two of them just do not go together. You’ve heard about left brain, right brain? Try marketing and finance!
In a larger company you have the luxury of separating the two, with the finance department not really giving much thought about what goes on in marketing (other than thinking they are a bit odd), but as long as the sales are rising and the budget isn’t busted they can tolerate having them around. The marketing department tries to stay awake during the finance briefing and other than complaining about how stuffy the finance people are and the fact that they never have enough money, really just tries to do their best with what they have to work with. Yet, when the same person has responsibilities in both areas, look out.
So like most small businesses these days, one of the most frequent topics of conversation revolves around internet marketing and where those ad dollars should be spent. What is exciting about all the new platforms out there is that marketers are now able to get fantastic data on who is seeing their ads and how they are responding to them. They can take this data and then in turn refine their ads to reach the exact audience they want to target. This is at least the promise of Facebook’s (NASDAQ: FB) advertising platform. Yet, when I look at what’s really happening through the point of view of my finance textbook, I’m not too terribly excited. You see, I cannot tell if I am actually getting any return whatsoever.
Ok, I admit, I see the clicks, believe me I see the click because each of those clicks cost me a buck or two. I even see the new fans on the Facebook page and that’s cool. I like that they like my ad, makes me feel all warm and fuzzy to see that my ad is liked. Who likes to see advertising anyway? So the fact that they like mine is pretty nifty, but is anyone actually buying what we are trying to peddle? Because if they are not, why are we wasting our money?
One of the reasons behind the success of Groupon (NASDAQ: GRPN) is found in the return on investment they can bring to businesses. While most will complain that the ROI is very meager and sometimes it’s more of a loss leader, you do know the exact success of the deal. Even LinkedIn (NYSE: LNKD) does a better job as far as the ability to calculate ROI goes. The Lead Collection bar allows you to know who is interested via an email with their LinkedIn profile. I can then pass that lead to the sales department for what should be a fairly easy conversion. So, I ask again, Facebook, where is my ROI?
To be fair, you can rack up quite the bill on Google (NASDAQ: GOOG) without giving much of a second thought toward figuring your ROI because you want to be found on Google. The job is to get your name out there and let your website do the sales pitch for you. Not so with Facebook -- you’re looking for a response and companies are increasingly paying more attention to whether or not that is accomplished. Take GM’s (NYSE: GM) recent announcement to pull their $10 million in paid ads on Facebook after concluding they didn’t have a big impact on consumers. Obviously the ads were generating a response -- that’s quite a large bill they were racking up -- but was it leading to sales?
There are a lot of really smart people over at Facebook and I wouldn’t put it past them figure this one out ... after they figure out how to monetize mobile, of course. Because if you think about it, to give the marketing crew the ability to head into the finance department with solid numbers backing up their case is a big win for everyone involved. If Facebook can integrate to your e-commerce platform, just think of the revenue possibilities that could have for both sides. I need to see something more and I don’t think I am alone. So Facebook, about that ROI...?
latimerburned owns shares of LinkedIn. The Motley Fool owns shares of Facebook, Google, and LinkedIn. Motley Fool newsletter services recommend General Motors Company, Google, and LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.