Why GM and Many Others Fail With Facebook Ads
“Facebook (FB) got a black eye last week when General Motors (GM) announced it would cease advertising on the platform, yanking $10 million in annual ad spending away from Mark Zuckerberg just days before the company’s IPO. The move caused some to wonder if Facebook’s business model is flawed. After all, the social network made 85 percent of its $3.7 billion in revenue last year from those little ad boxes on the side. If marketers stop buying them, Facebook’s stock price could get hit even harder and further than its 11 percent ding on May 21.”
“That’s wrong-headed, because no free market spends billions on a media format with zero return. What GM’s retreat really shows is the harsh reality that other brands must face: Making social-media communications work requires heavier lift than many organizations can muster.”
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