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Over the past two years, Facebook has fast become a major area of interest for brand marketers.

Lured in by the social network's 500m+ users, some marketers are evoking memories of the AOL days, going as far as to promote Facebook Pages over their own websites.

From storefronts to movie rentals, brands are increasingly focusing on trying to use the site as a platform for commerce. Some believe Facebook commerce, or f-commerce, could be the next big phase in the evolution of ecommerce.

But according to a report by Forrester Research's Sucharita Mulpuru, despite all of the talk about f-commerce, Facebook isn't likely to become a retail force.

The Wall Street Journal has the details:

A social-network presence, [Mulpuru] found, was less effective at customer acquisition and retention than e-mail and paid search.

The study found that the average Facebook metrics are a 1% click-through rate and a 2% conversion rate. E-mail marketing, by comparison, has an 11% click-through rate and a 4% average conversion rate.

At scale, the difference between a 1% CTR and 2% conversion rate, and a 11% CTR and 4% conversion rate, is, of course, likely to be quite significant.

Couple this with the fact that many consumers 'like' brands on Facebook simply to receive discounts, and brands looking to drive sales have to ask the question: is Facebook really providing bang for the buck?

The answer to that might very well be no, but even if Facebook's performance is overestimated, does that mean it isn't an important marketing tool? Almost certainly not, making it easy to dismiss Forrester's report altogether.

After all, not all Facebook presences are created equal, and it's worth noting that some are pretty uninspired, and the site has limited control over the quality of the offerings and strategies brands implement on its social network.

But other studies are starting to call into question Facebook's potency too. For instance, the World Federation of Advertisers recently surveyed digital marketers from two dozen global brands. The result: less than a quarter of the digital marketers thought they were getting a "good" return on their investment.

A 2011 Razorfish study discovered that when consumers want to interact with a company, Facebook isn't at the top of the list of places they turn. Most of the time, Razorfish found, consumers actually prefer to interact with companies through their corporate websites.

These studies paint an increasingly mixed portrait of Facebook as a marketing platform. Yes, it is home to a massive audience, and there clearly are opportunities to engage with consumers in meaningful ways using the social network. But if consumer intent simply isn't there, or is there in lower-than-expected quantities, those things may not mean a whole lot.

From this perspective, when it comes to marketing, Facebook may be like a $100,000 diamond watch: it sparkles and captures a lot of attention, but its sparkle may mask the fact that there's a limit to its marketing utility.

Brands should be aware of this, because just as a flashy watch doesn't necessarily keep the best time, the sexiest social network doesn't necessarily deliver the highest ROI.

Patricio Robles

Published 11 April, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2392 more posts from this author

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Tamara@Adaptive

Hmm.. might this be beacuse Facebook is still relatively new? Especially for brands, corporations and its older audience. We mustn't forget that the social media site began as a place for university students to interact. Only recently has it become a hub that baby boomers are familiar with, let alone engaging with. I don't argue that email is currently generating better ROI for companies, but in time I think that may change. The social features embedded all over that site are too prominent to ignore. Moreover, Facebook remains a site that people visit voluntarily, unlike our email accounts which are filled with junk we don't want.

over 5 years ago

Adam Cranfield

Adam Cranfield, Chief Marketing Officer at Mynewsdesk

I think the way forward is integration with Facebook rather than choosing between the corporate website and a Facebook presence.

The key drivers for this will be:
1) Social recommendation/rating/review
2) The 'news feed' (Facebook, Twitter, whatever) becoming people's default 'inbox'

It is the underlying social graph which is key, not the 'physical' limitations (functionality, layout, etc) that brands currently have to operate within when building a Facebook presence.

over 5 years ago

Peter Gould

Peter Gould, Senior PPC Analyst at Epiphany

I think we may reach a point where our Facebook newsfeed can be segregated between friends and brands/company updates - I think at present, if you have a lot of page likes, it just adds to the noise, and the message can be lost or diluted at very best.

In terms of what may happen with f-commerce in the future, it's hard to say at this stage. I think with the new ability to design Facebook apps for pages using iframes which can just pull in information from a brand's own website, the capabilities are a lot more exciting. This could see Facebook users interacting with pages a lot more in the future for genuine purposes, rather than gimmicky ones as can happen at the moment.

Combine that, with real, exclusive deals users can't find anywhere else but by accessing the brand's Facebook page, and it could take off a lot more than it is.

over 5 years ago

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Daniel

You aren't taking account of the email open rate though surely? If only 10% open the email then the disparity is much reduced. Also you can't make any conclusions at all unless you factor in how much you spend to get a Facebook fan vs. a permission to email.

over 5 years ago

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Peter Birganza

Hi,
It`s true that Facebook is really an expensive website in worth. And all of this is just because of its newness. On daily bases Facebook team is trying to develop it with new features and categories. It is a platform where every type pf person comes to get solutions of their problem. Either it is a businessman, student or a simple computer user. It helps a lot to each and every person accordingly. So we can easily say that because of its use, it keeps worth up to $100,000.

over 5 years ago

Adam Cranfield

Adam Cranfield, Chief Marketing Officer at Mynewsdesk

Great point raised by Daniel re cost to acquire a fan vs cost to acquire an email address/permission. I don't think Lionel Messi could have acquired 7 million email addresses in 3 days (http://www.facebook.com/LeoMessi)

over 5 years ago

Patricio Robles

Patricio Robles, Tech Reporter at Econsultancy

Adam,

No, he almost certainly couldn't have acquired 7m email addresses in 3 days. But what is he going to do with 7m Facebook fans? It's not the size of your audience; it's the quality of the audience and what you can realistically do with it.

I think the evidence shows Email > Facebook in this regard.

over 5 years ago

Suleman Abdullahi

Suleman Abdullahi, Managing Director at Proedice

I think facebook is indeed the $100,000 dollars watch of marketing.

The web is generally a pull media not push.

Facebook become popular and grew to what it is today because it's a place that allows people to connect with reals friends and socialize on a personal level without much interruptions from marketers and advertisers.

I really don't think that will change with time. People do know where they prefer to conduct business as shown by the research.

I think marketers need to understand this and learn how to use the channel according to its strengths and not to expect it becoming something that it's not.

A good strategy and plan is important to make it work and deliver an acceptable ROI.

over 5 years ago

Anecia Jagpal

Anecia Jagpal, Link Analyst

I agree with Tamara as Facebook is still very new, however I do believe that brands should be able to interact on a much larger scale in order to utilise the platform more appropriately. I have written a post in regards to some research I have undertaken, which talks about Brands interacting on Facebook http://www.epiphanysolutions.co.uk/blog/do-brands-really-connect-with-their-fans-on-facebook/

over 5 years ago

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Dyllan Allen

This could see Facebook users interacting with pages a lot more in the future for genuine purposes.It is a platform where every type of person comes to get solutions of their problems.

almost 4 years ago

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