Has Facebook Hit its Peak?

Facebook noise has been significant in recent months leading up to Friday’s much anticipated IPO and yammering over social media and unpredictable tech stocks (and now investor lawsuits). Has Facebook hit its peak? One fact remains – more than 900 million registered users is a huge audience. And some thought 500 million would be the peak for Mr. Zuckerberg’s resume.

Let’s be clear. Not everyone is on Facebook. Not everyone gets Facebook. If it were an advertiser’s nirvana, you wouldn’t hear about mega brands like General Motors dumping its $10 million yearly spend on paid Facebook ads (though it will continue to have a marketing presence on Facebook).

And while GM is ditching, competitor Ford is staying put.

Ford was the first automaker to reveal a new model on the social-media network in July 2010. Normally, automakers reveal models at major auto shows but Ford unveiled the redesigned Explorer on Facebook first as well as at a series of live events in cities across the country, according to the Detroit Free Press.

Much like any content strategy, some throw social media dollars around to simply “be present.” Others use linked strategies across all channels – advertising, marketing, digital, PR and video – to ensure the best outcomes: brand loyalty and sales. It all boils down to strategy (if businesses are wise enough to do so).

But not everyone chooses wisely. Here’s an example:

Two Facebook campaigns were managed during the month of April for a grand opening event at a retail store in the Midwest. Both were managed by social media agencies.

Facebook Case A (Agency X)

Ad campaign ran 7 days and cost $3,000. The total number of impressions was 1,454,124. The cost per 1,000 impressions, or cpm, was $2.06. The cost per click was $3.24.

Facebook Case B (Kyle Communications)

Ad campaign ran for 8 days and cost $600. The total number of impressions was 1,641,622 (higher than the more expensive campaign in Case A). The cost per 1,000 impressions, or cpm, was 36 cents. The cost per click was 76 cents.

The click-through rates, or the percentage of times people actually clicked on an ad, were essentially the same. What’s the difference in the two campaigns?

Good question. When you hire a social media agency, you need to do the following:

Be smart in selecting your target audience by using the best demographics and interests
Monitor your ad campaign daily to check changing ads rates and activity
Cut out any advertising that falls below the rate of .025 percent (meaning bad ads)
Keep the best performing ads, especially those above .05 percent

Often, a digital agency puts an ad campaign on auto pilot and doesn’t monitor daily. Or they overdo the targeted demographic. That’s a mistake—a waste of a client’s money and time spent in a small creative space where there is a limited attention span in an opportunity window.

Imagine how GM feels if it wasted $10 million on paid ads that didn’t perform.

Or as talk show host Jimmy Fallon said after the short-lived IPO frenzy and stock decline: “Now you can lose all your money in the same place you lost all your time.”

Don’t let it happen to you.