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BBC Investigates Facebook Ads

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For many companies, Facebook fans are a much sought-after commodity. After all, plenty of people spend hours glued to the social media site, and having your business’s messages show up there makes you a part of their virtual community.

But an investigation by the BBC may make marketers think twice before buying Facebook ads asking people to “like” their pages. Graham Cluley of the security firm Sophos told the BBC that spammers and malware distributors create fake Facebook profiles capable of automatically hitting the little thumbs-up button on thousands of pages. By making all those connections, they build bigger communities of people to reach out to with their spam and scams, but they may also give businesses a false impression of how well their Facebook ads are working.

Facebook has revealed that 5 to 6 percent of its users, may be fake. That’s not a huge percentage, but it adds up to about 54 million profiles, and they may be disproportionately the ones that end up “liking” business pages.

To test how big the problem is, the BBC created a page for a fake business called VirtualBagel and bought ads designed to attract fans. In just a day, the investigation found VirtualBagel got 1,600 likes, “despite the fact that the page offered no products and no interesting content.” And, although the ads were aimed at the U.S., the U.K. and parts of the Middle East and Asia, almost all the likes came from profiles in India, Egypt, Indonesia and the Philippines, and many of them appeared to be fake.

Facebook told the BBC that it doesn’t see a “wave of likes” coming from false users, but Cluley suggested the social media giant has reason to downplay the problem. After all, its biggest revenue source is ads.

So, what can you do to make sure your business page is getting real Facebook friends? Of course, posting interesting, useful content is a major part of any good social media strategy. It’s also a good idea to keep track of the statistics that Facebook provides, and to use other tools like Google Analytics to see if Facebook fans are becoming customers.

Beyond that, different kinds of companies will have different strategies that fit them best, so an IT consulting firm can help you figure out your own best practices.

Facebook’s IPO and the Trouble with Free Media

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As Facebook approached its initial public offering last week, observers couldn’t seem to decide whether the social media giant was a good investment. After the IPO, as the company’s stock price fell from its initial price, the debate continued.

To some people, the company’s decision to set its price at $38 a share looked like some serious overreach. After all, despite Facebook’s ubiquity in the lives of the computer-using public, it doesn’t generate anywhere near as much money as most high-profile tech companies. At Business Insider, Henry Blodget argues that the company is seriously overvalued, with a price 40 to 100 times its likely 2013 earnings, compared with multiples of 10 for Apple and 12 for Google.

But, at Seeking Alpha, Helix Investment Management makes the opposite case, contending that Apple and Google were more expensive when they went public. The post also argues that the simple fact that Facebook is making profits sets it apart from most social media companies. Still, even Helix qualifies its approval of Facebook’s stock, saying that investors will have to wait several years for any profit.

The fact that the stock didn’t “pop” with a brief price spike after the IPO has less to do with its actual worth than with its executives’ decision to set its price toward the high end of the price range they’d originally suggested. The fundamental value of the company will only emerge over time, and it’s going to depend on Facebook’s ability to make money from its users. It’s essentially the same problem that all social media, and all media in general, face.

Of course, Facebook, like most internet destinations, is free to users. And, as a popular adage has it, “if you’re not paying for it, you’re the product.” The resource Facebook can make money on is its vast stores of data about its members. So far, though, the money it makes on advertising isn’t terribly impressive. The question for the company is, how can it turn all that information into real money?

And, the question for potential investors is, is Facebook smart enough to figure out a good answer to that question?

New Google Tools For Ads

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Anyone who’s ever taken a look at what Google Analytics has to say about their website knows there’s a lot of data out there. You can find out whether people are clicking through online ads to find your site, how long they’re staying once they get there and whether they’re clicking through to buy anything you’re selling. In fact, you can end up wasting hours and hours delving into details about unique visitors and bounce rates.

But all this information doesn’t necessarily add up to a real understanding of how your online branding is actually working. Do people like or trust your company more than they would have if you’d never spent a cent on your online presence?

Now, Google is promising it can answer questions like that. Its new Brand Activate Initiative is designed to offer insights on how effective online ads are that are comparable to traditional measurements used for television advertising. It is setting its sights squarely on big brands that have been slow to move their advertising dollars from TV to the Internet.

So far, the company has introduced two new products as part of the initiative. Active View promises to count not just “impressions” of an ad, but “viewed impressions,” meaning that the ad is at least 50 percent viewable on the screen for at least one second. Active GRP, a measurement analogous to the “gross rating point” measurement used in TV campaigns, provides real-time data that makes use of anonymous user data.

Neal Mohan, vice president of display advertising for Google, explains the new products in a blog post:

Is a particular ad in your campaign especially useful at improving brand recall in Illinois? You should be able to immediately increase your coverage throughout the Midwest. Is one ad slightly less effective at driving purchase intent and in-store sales? Tweak the creative, straight away.

So far, it’s unclear how much traction the new products will have. Advertising experts interviewed by marketing news site Clickz said they’re reserving judgment until they know more about the technical details behind the new tools. Meanwhile, many companies may want to seek IT consulting help to figure out the best way to make use of the information they can glean from the new metrics.