What's the ROI of a TV commercial? What's the ROI of a press release? What's the ROI of putting your pants on every day? It's hard to measure but there's negative consequences for not doing it.I agree. Let's take things a step further. No company better illustrates my thesis than Apple. I don't know what Apple thinks of Facebook. I can't go by Tim Cook's mysterious and guarded remarks at a conference or other rare public appearance. However, I know this -- Apple understands branding. As such, even though it might not have much use for it, Apple understands the power of Facebook's platform. Post-Steve Jobs, it has stumbled a little (see the yanked Genius ad campaign), but a) the brand was built long ago; b) given the continued popularity of Apple's products, it will be tough to kill the brand overnight; and c) they're doing lots right (see the excellent iPhone 5 ads with the guy's thumb). CNBC spoke to another Facebook executive. Brad Smallwood, the company's lead on measurement and insights, beat back something we can thank Google ( GOOG) for, the notion that all that matters in Web 2.0 advertising is number of clicks. Clicks do not build brands. Clicks do not translate into any type of effective long-term advertising, marketing or branding strategy. Along similar lines, doing a Super Bowl ad does not necessarily morph into mega sales on Monday morning, particularly when you sell big-ticket items such as cars or are already a recognizable part of the dominant culture (e.g., Ford, GM, McDonalds). Certainly, you'll get immediate ROI from Facebook or the Super Bowl if you tell the prospect, "Come to our Web site tomorrow morning and get $50 off of an iPod." That's easy. But it's certainly not something that will carry your company's image for decades. Sales and snappy gimmicks don't work. It's about forging bonds with your target audiences. Speak to them. Make yourself a sustaining and relevant force in their lives. Being where your key demos are -- on the Super Bowl, on Facebook, on Twitter -- keeps you relevant. It helps you build, hold onto and evolve mindshare. That's branding. Like Monty at Ford says, you cannot put a price tag on this. You know its effective, not based on numbers and metrics they teach in marketing class, but because of intangibles. You cannot teach the stuff that makes great branding and marketing minds tick. They just know when things are clicking -- pun intended. At the time of publication, the author was long FB. Follow @RoccoPendola This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
I just don't see it becoming an institution like Twitter. At least not as things stand today. As much as I think they should ignore the media and, to an extent, shareholders -- sort of like Apple ( AAPL) does -- part of me feels like Facebook wins when Mark Zuckerberg and Sheryl Sandberg speak in public and high-profile settings. They both do a nice job instilling confidence. So, near term, I'm not all that concerned. Thinking farther out, Facebook faces two fundamental challenges. Part of the CNBC coverage nailed point one: Investor pressure forces Facebook to do things differently. In the perfect world of the perpetual startup, focus never veers from the user experience. Once public, however, shareholders exert pressure. You're compelled to change. Some folks argue that you "have" to change. Facebook feels this stress. In just the last few weeks the company appears to have accelerated monetization efforts. While Facebook Gifts and "social search" will likely ring the register -- thus my long position -- I dislike a too-fast, too-soon approach to revenue and profitability. I know that sounds foreign to many investors. But "many investors" just don't get it. They'll never understand the notion of the perpetual startup. They simply refuse to take that perspective. That segues to Facebook's second fundamental challenge. As Sandberg told Boorstin, social ads are a new platform, thus, it "takes a while to understand." In other words, Facebook has to train certain advertisers. It has to arm wrestle them out of their outdated ways. Consider the difference between Ford ( F) and General Motors ( GM). Of course, GM made headlines when it canceled Facebook advertising (and bailed from the Super Bowl). Despite the reality that Facebook actually dissed GM, the news initiated the meme that Facebook ads are not effective. There's no ROI.
Last week, at a Business Insider conference , Scott Monty, Ford's global digital/multimedia communications manager, cleverly stated: