SAN FRANCISCO: Four out of five Facebook Inc (FB) users have never bought a product or service as a result of advertising or comments on the social network site, a Reuters/Ipsos poll shows, the latest sign that much more needs to be done to turn its 900 million customer base into advertising dollars.
The online poll also found that 34 per cent of FB users surveyed were spending less time on the website than six months ago, whereas only 20 per cent were spending more. The findings underscore investors’ worries about FB’s money-making abilities that have pushed the stock down 29 per cent since its initial public offering last month, reducing its market value by USD 30 billion to roughly USD 74 billion.
About 44 per cent of respondents said the market debut, seen by investors as troubled, has made them less favourable toward FB,
according to the survey. In the May 31 to June 4 poll of 1,032 Americans, 21 per cent said they had no FB account.
FB’s 900 million users make it among the most popular online desti-nations, challenging entrenched internet players such as Google Inc and Yahoo Inc. Not everyone is convinced the company has figured out how to translate that popularity into a business that can justify its lofty valuation.
While the survey did not ask how other forms of advertising affected purchasing behaviour, a February study by research firm eMarketer suggested FB fared worse than e-mail or direct-mail marketing in terms of influencing consumers’ decisions. “It shows that FB has work to do in terms of making its advertising more effective and more relevant to people,” eMarketer Analyst Debra Williamson said.
Those concerns were exacerbated last month when General Motors Co, the third-largest advertiser in the United States, said it would stop paid advertising on FB.
FB declined to comment in detail on the survey, but referred to case studies of companies such as Nutella, which found that a 15 per cent increase in sales was attributable to FB, and restaurant chain Applebee’s, whose FB ads delivered a three-fold return on investment.
Measuring the effectiveness of advertising can be tricky, particularly for brand marketing in which the goal is to influence future purchases rather than generate immediate sales.