Brands Question Facebook Ad Efficacy

Wall Street Journal , Thursday, May 3, 2012 10:07 AM
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Facebook Inc. has built a $3 billion-a-year advertising business by convincing marketers to buy new forms of advertising designed to create buzz around their brands. But some advertisers with big spending accounts are wondering whether they're getting their money's worth. The doubt lingers as bankers and prospective investors decide how to value Facebook for an initial public offering planned for May 18, said people familiar with the matter. Facebook executives will be pitching the company to big investors in an IPO roadshow starting Monday, these people said.

"The question with Facebook and many of the social media sites is, 'What are we getting for our dollars?'" said Michael Sprague, VP marketing at Kia. The automaker has advertised on Facebook since 2009 and plans to increase its ad spending on the site. While building brand awareness on a site with 900 million users is valuable, Sprague said he's unclear if "a consumer sees my ad, and does that ultimately lead to a new vehicle sale?"

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