The End of Free Advertising on Facebook?

By Michael Liang, MBA Class of 2012

After Facebook filed for its IPO last week, online media advertisers and marketing pundits shifted their focus on Facebook metrics such as enormous user growth and user size, to advertising sales – a more useful metric for measuring value. It wasn’t until last year that Facebook began to charge customers for advertising and turn their ads into a revenue generator. For several years, advertisers were able to set up fan pages for free, where consumers could “like” or “subscribe” to companies or products they wanted to support or follow.

A Gordmans Store

An example given in the article follows Gordmans Inc., a Nebraska-based retailer that started a free page to engage with their customers online. As Facebook added more features and components to its site in 2011, Gordmans’ page content started to fade out of most “newsfeeds,” as Facebook users shared more content with each other. Gordmans’ media manager, Veronica Stecker, said she was rarely seeing posts from Gordmans in her own newsfeed. Stecker decided that she would move Gordmans from providing an “information-only” platform to building more interactive communication tools. She decided to start buying Sponsored Stories – introduced by Facebook last year – a move which generated a substantial increase in click rates. An unpaid story typically generated between 16,000 to 18,000 clicks, whereas Gordmans’ latest sponsored story generated 118,000 clicks.

Example of a Sponsored Ad, which they must have paid a premium for because I reloaded Facebook 10 times and that ad was at the top every single time.

Currently, Facebook offers different levels of advertising, ranging from less expensive banner ads to more expensive Sponsored Stories with premium placement, Most of the $3.71 billion in revenues that Facebook generated last year was attributable to advertising revenue.

Questions for class discussion:

–       Do you think Facebook’s change to its advertising offerings will cause an advertising bidding war between companies vying for premium ad space, where the big players will once again drown out the smaller ones? Why?

–       If you were in charge of marketing for your company, would you advertise on Facebook? Would you pay extra for banner ads or Sponsored Stories?

http://online.wsj.com/article_email/SB10001424052970204662204577199460106172008-lMyQjAxMTAyMDAwMjEwNDIyWj.html

This Weeks Email Marketing Trend: The Super Bowl

By Michael Liang, MBA Class of 2012

Elite Email – a leading email-marketing service provider – analyzed email trends for the last week in January and found that “Super Bowl XLVI” was at the top of all trending topics. The ubiquity of digital advertising around the Super Bowl demonstrates how cheap and effective outbound marketing can be when done strategically. Outbound e-marketing communications such as email marketing are also an extremely fast way for businesses with limited resources to quickly launch a marketing campaign. As expected, both online and offline retailers have been launching email promotions in anticipation of the Super Bowl on February 5th, 2012. Bars and restaurants have also started sending out email marketing coupons in an effort to increase customers on game day.

This year’s “Super Sunday” features a rematch of the 2008 Super Bowl, with the New York Giants facing the New England Patriots. Organizations both large and small implemented key phrases such as “Super Bowl,” “New York Giants,” and “New England Patriots” in their email marketing. Many retailers that typically aren’t associated with with sporting events are finding creative ways to tie their promotions to the Super Bowl. Restaurant and bars are even using email marketing campaigns to offer customers free appetizers or deserts – just to get them in the door. Successful marketers, both traditional and digital, understand the draw and potential money that can be made off of an event as widely celebrated as the Super Bowl and use it to their advantage.

Questions for class: What are some of your favorite and least-favorite Super Bowl ads of all time? Why we’re they successful or unsuccessful, in your opinion?

Below is a video of this year’s Volkswagen Super Bowl commercial. Enjoy!