Essay Sample on Facebook and Advertisement

Introduction

According to Muller Joann's article titled "GM says Facebook Ads don't work, pull $10 million account," the author stated that days before stock offering by Facebook, GM (General Motors) planned to terminate its social media advertising contract since the paid Ads had dismal impacts on its consumers (2012). Nonetheless, as per accounting analysis, GM spent roughly $ 40 million yearly on Facebook marketing system. Moreover, out of the budget, the establishment paid $10 million on advertisements (Muller, 2012). After numerous deliberations as well a meeting between GM management and Facebook, advertisement team on the relevance of the Ads, the General Motors team concluded that the marketing approach was not necessary; thus, making them pull out at a time Facebook was to launch its $105 billion IPO structure (Muller, 2012).

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Facebook Advertising Revenue

Before IPO

According to the U.S. Security and Exchange Commission, Facebook accounting records highlighted that the establishment's revenue, as well as benefits in 2010, was 1.97 billion and in 2011 in a record $ 3.71 billion (Dembosky, 2012). The enterprise increased its revenue between two years was $ 1.74 billion. Moreover, it was short of the company's e-marketing projection that was set to $ 4.72 billion (Oran & Oreskovic, 2016). Back to back, prior to the IPO, the $1.74 billion increment was as a result of 69% increase on the advertising profits and 42% of the delivered Ads and 18% of the average price (Oran & Oreskovic, 2016). Besides, Facebook e-marketing system recorded a revenue of $ 3.7 billion of the entire 2011 revenue; thus, making advertisement as the primary source of Facebook's total income (Oran & Oreskovic, 2016).

After IPO

In 2012, Facebook launched an IPO to assist the enterprise price structure in justifying its business approach. Moreover, after the launch, Facebook shares declined from IPO price by $20.45 in 2012 (Trefis Team, 2014). It was due to the uncertainty of the investors towards Facebook's ability to mold its mobile-service, which was rapidly and steadily developing. Nonetheless, Facebook income was expected to reduce per 100-page view because it hosted foreign users, as well as there, were mobile use alterations (Trefis Team, 2014). In another context, Facebook placed almost its operational efficiency of Ads to steer its network advertising wage structure (Oran & Oreskovic, 2016). To establish supremacy, Facebook launched and supported feed-oriented ads for mobile gadgets, and during this transformation, it generated a revenue increase of $ 4 billion in 2012 (Greenfield, 2012). The next year the revenue increased by $ 2.98 billion (Trefis Team, 2014). In 2014 and 2015, the revenue recorded were $ 11.49 billion and $17 billion respectively. Besides, the feeds generated roughly an average of 3% of the advertising revenue from 2013, making the growth in advertising income (Oran & Oreskovic, 2016).

Effects of General Moto Pullout on Facebook IPO

In May 2012, General Motors restricted its operation with Facebook by not buying the ads. It pulled roughly $ 10 million from the enterprise's advertising online platform since it perceived it as ineffective. Next, the decision to pull out had minimal impacts on its consumers. Instead, rely on Facebook ads that they stated was ineffective GM distributed its marketing funds to various media outlets. Facebook faced a significant decline from the price offers on its shares. In simple terms, Facebook raised $ 16 million and lost $ 50 million by August 2012. Additionally, GM was not the primary reason for the economic turmoil Facebook faced, but the financial institutions strengthened the original share prices.

Facebook Analysis

Conversion Rates

Facebook used Clicks per impression conversion rates tool. It is also identified as the CTR, which stands for click-through rates. Only it illustrates the quantity of click recorded for a single ad impression (Ho, 2018). Nevertheless, it is used in identifying the advertisement and marketing qualities; therefore, the higher the value, the more attractive the ad (Ho, 2018). The value is reflected in the frequency and the number of clicks made by the users. In short, the cost per click method can be calculated using the formula $019 per 1,000 impressions (Ho, 2018).

Customer Acquisition

There are two approaches that Facebook Ads can be used in achieving customer acquisition. These methods are the establishment of an audience through the use of Facebook pixel and using an e-mail list. Facebook pixels are used when segmenting an audience target (Hoyos, 2017). It allows the advertisers/agencies to create custom client/s who is obligated to perform designated action, for example, streaming videos and browsing specific pages, among others (Hoyos, 2017). Nonetheless, it promotes creativity by offering promotions to clients or added-value products and information (Hoyos, 2017).

Creating an audience with an e-mail list is also an option that is easy to set up when the agency has been collecting consumer information. Facebook accepts an organization to establish consumer audience based email lists (Hoyos, 2017). The quality and quantity an agency can collect about its clients the more accurate Facebook search and locate the users; therefore, making the audience more accurately (Hoyos, 2017). Ad Sets is used to define target markets as well as the consumer. Moreover, it is essential in the exclusion, inclusion and upsells of consumer acquisition and retention (Hoyos, 2017).

Cost and Audience-Targeting Tools

Customer Lifetime Value (CLV) is a metric used to assist an Ad budget effectively. It is calculated by finding the product of the average order, number of repeat sales and average retention period. Moreover, since Facebook analytics has the features of truck-only micro-conversion and not CLV. CRM programs such as HubSpot/Sales-Force can assist with the caption of micro-conversion. To make CLV function appropriately, the user needs to apply Zapier to help integrate Facebook ads with Sales-Force; thus, creating automated updates with the information captured on Facebook platforms. After six-months, the Sales-Force account will have recorded enough data used in calculating CLV.

Facebook Advertising Metric

CRT is a useful metric used in tracking consumer engagement on social media platforms. The parameter allows one to measure the rate of clocks to impression reflected in the ads (Nance, 2014). On the contrary, brand awareness relies on the metric of perception. Impression metric also identified as CPM is essential when an enterprise needs to run a campaign regardless of the goals since the approach will actively promote brand awareness to the ideal audience (Nance, 2014). While using online systems to advertise, CPM represents the number of times the ad served within a defined duration (Nance, 2014). Moreover, it allows the agencies to promote cost-per-1,000 impressions, which assist in budgeting on the impact. Therefore, more impressions mean a higher CPM (Nance, 2014).

Attribution Modeling

Facebook released Facebook Attribution to track the efficiency of Facebook Ads. Its principal purpose is to inform the advertiser/agency on the ideal picture of their consumer journey through various channels and gadgets (Guest, 2014). Nonetheless, it is a measurement tool that relies on the data structure that gives credit to the touch section based on the context driving conversion. In other terms, Facebook attribution enhanced the enterprise's success scope. First, it has improved a full transparency online marketing approach by reflecting on how best and accurately advertisers/agents document their ad efforts (Guest, 2014). In other terms, it promotes accurate conversion; thus, promoting a health client-advertise relationship.

Challenges of Branding Products and Services on Facebook

Facebook faces several challenges when used in branding products and services, but this section will discuss only two essential problems. The first issue is the Ads According to research, organic Facebook post only record 10% fan base, and to reach and cover the remaining 90% of the consumers, one will need to sponsor the posts (Martinez-Lopez et al., 2015). Ads are majorly used to drive objectivity; which makes them very essential. Unfortunately, the challenge is to understand what performs for the standard of content one promotes. If the objectivity of the ads is not defined precisely, then it will affect the branding process (Martinez-Lopez et al., 2015). The next issue is the constant production of visual content. Often marketers have limited tools, especially when bootstrapped to produce quality visual content; thus, affecting the entire advertisement process (Martinez-Lopez et al., 2015).

Future Challenges of Facebook

Majorly the challenges of branding products and services serve as a significant threat to Facebook's future. The first threat is the inadequacy of assessing social media ROI, which is the achievement an enterprise secures from the money, time and resource it used in marketing. The inability to ensure social media ROI can make advertises loses faith in the Facebook advertising platform, and return affecting the company's revenue (Martinez-Lopez et al., 2015). Next, since the challenges facing Facebook branding of products and services originate from the ads created since lack of quality and creativity will lead to a decline in branding, the enterprise will face ad load saturation in News Feed, which in return will slow own revenue growth (Martinez-Lopez et al., 2015).

References

Dembosky, A. (2012, April 12). Facebook profits dip before the IPO. Retrieved from https://www.ft.com/content/47f6526c-8d83-11e1-b8b2-00144feab49a

Greenfield, R. (2012, December 14). 2012: The year Facebook finally tried to make some money. Retrieved from https://www.theatlantic.com/technology/archive/2012/12/2012-year-facebook-finally-tried-make-some-money/320493/

Guest. (2014, June 11). The truth about Facebook attribution. Retrieved from https://www.adweek.com/digital/the-truth-about-facebook-attribution/

Ho, M. (2018, September 17). 4 Ways to reduce customer acquisition costs with Facebook Ads. Retrieved from https://www.socialmediaexaminer.com/reduce-customer-acquisition-costs-facebook-ads/

Hoyos, E. (2017, October 31). Facebook Ads customer acquisition targeting. Retrieved from https://blog.markgrowth.com/facebook-ads-customer-acquisition-targeting-3b602a3cff42

Martinez-Lopez, F., Rafael, A., Aguilar, R., & Molinillo, S. (2015). Online Brand Communities: Using the Social Web for Branding and Marketing. Springer.

Muller, J. (2012, March 15). GM says Facebook Ads don't work, pull $10 million account. Retrieved from https://www.forbes.com/sites/joannmuller/2012/05/15/gm-says-facebook-ads-dont-work-pulls-10-million-account/#1a8d2ec02ba8

Nance, A. (2014, September 14). 3 Metrics to help measure your brand awareness campaign. Retrieved from https://www.randallreilly.com/3-metrics-to-help-measure-your-brand-awareness-campaigns/

Oran, O., & Oreskovic, A. (2016, May 2012). Facebook boosts IPO size by 25 percent, could top $16 billion. Retrieved from https://www.reuters.com/article/us-facebook-shares/facebook-boosts-ipo-size-by-25-percent-could-top-16-billion-idUSBRE84F02320120516

Trefis Team. (2014, October 24). How Facebook Has Evolved Since The IPO And Where Is It Headed? Retrieved from https://www.forbes.com/sites/greatspeculations/2014/10/24/how-facebook-has-evolved-since-the-ipo-and-where-is-it-headed/#3b8a72806459