The Effectiveness of Facebook as a Tool to Increase Business

Thu, Nov 29, 2007, by Paolo Narciso

Marketing

Interested in driving more business to your website?

This article presents the findings of my research on the effectiveness of Facebook as a recruiting and marketing tool for business. Facebook is a social networking website that allows users to communicate with friends and exchange information. The site is free to users and generates revenue from advertising and sponsored groups.

Of the 33 million users, almost 60% log on to the site daily and spend an average of 19 minutes a day on Facebook. Once an exclusive online portal for college kids, Facebook now signs up over 150,000 new subscribers per day, of which 41% are over 30 years old. Unfortunately, the rapid growth of Facebook is causing problems for businesses.

Facebook is said to potentially cost businesses over $5 billion per year in lost employee productivity when employees spend time on Facebook versus performing their assigned work. Its popularity is quickly changing the paradigm of what a Web-portal is supposed to do, and its users are growing at a rate quicker than any Web-portal in the short history of the Internet.

Web portals like
Yahoo, MSN and
AOL
began the revolution of the Internet as a powerful tool by allowing users to browse the Web. As the number of useful sites increased rapidly, search technology, such as
Google, replaced how users find new sites and relevant information.

However, the biggest problem with search is that it still requires the user to do work. In essence, the user must know what they are searching for and then filter through the result to find relevant information. The value of Facebook, and hence its success, is that it requires very little work. Once users set up their networks, friends in that network push information to the users that is useful because of the nature of the network people with similar interests sharing relevant information.

It’s exactly this type of information sharing that can be leveraged by businesses to recruit new employees and also to refine their marketing to target the right customers more cheaply and effectively. In particular, I will focus on
Facebook’s
potential to increase social connections, develop referrals, and communicate directly with consumers. My research shows that business and organizations use these core applications to generate significant revenue as well as increase the value of social networking to reduce recruiting costs and at the same time increase the effectiveness of attracting candidates for employment.

Research Methods:

In determining whether or not Facebook is an effective tool to be used by businesses to win more customers and attract better candidates, I used a variety of sources. I performed the following tasks when conducting my research:

  1. I first searched the Internet for any information related to Facebook and “Facebook for business” and found many websites discussing the topic. These sites included articles and research from reputable national business and marketing publications as well as marketing bloggers. I chose sites that were informative and objective to use as my sources.
  2. I also searched the New York Institute of Technology Library Online for journal articles and research around Facebook. Specifically, I found articles from ProQuest that included case studies from recruiting and marketing organizations.
  3. I became a Facebook user and did a usability test on all the Facebook core applications. I also created my own Facebook network and observed the relevancy of information being shared on Facebook. I also queried other Facebook users as to the effectiveness of advertisements and sponsorships of groups. In addition, I surveyed employers to understand the effectiveness of Facebook as a recruiting tool.
  4. I evaluated the effectiveness of Facebook as a business tool for recruiting and marketing based on the results of the research

Results:

Facebook has a significant advantage over other social networking tools such as LinkedIn and MySpace since it allows business users to make more meaningful contacts and thereby increase the effectiveness of marketing and recruiting. Facebook accomplishes that by providing a platform for users for creating networks among like-minded people (Pulver, Aug. 6, 2007). Unlike LinkedIn, the user does not rely on an introduction to someone they do not know to establish a connection. The user simply can create meaningful networks by engaging with the community and sharing relevant information.

Facebook allows marketers to solicit and interact with consumers to get better feedback regarding their brand, products, and services. This type of interaction with consumers allows marketers to potentially create new products or to change the positioning of their product to meet consumer needs. Target Stores is one of the companies that is seeing success on Facebook. Rather than telling a story about its brand, Target sponsored a party-planning page on Facebook. That resulted in a 6.1 percent increase in sales in August 2007 compared with the same period in 2006 (Voight, Oct. 8, 2007).

The social networking site is also proving effective for recruiting. Several companies are turning to Facebook to reduce recruiting fees. The site’s effectiveness is based on employee referrals.

According to Brett Merchand, Senior VP of Cossette-Communication Marketing, “We were spending hundreds of thousands on recruiting fees, which I didn’t want to do anymore. Gen Y is different from the generation I came from. They come in with a certain sense of entitlement, and Cossette went through a period where we thought we’d change them. We’ve come to the realization that you really have to manage this new generation. They don’t want to work in sweatshops, and let’s face it, agencies have been built on unpaid overtime. And that poses a recruitment challenge, because you have to address those concerns up front. So we lean heavily on referrals.

We’re getting most of our people from paid referral programs, internal or external. And we’ve got four people in the past month through Facebook. It’s all about tribes now” (Dickie, Oct. 2007).

Conclusion:

The process of using social networking to distribute and structure new kinds of information is still new. In social networking, the value of the content is only increased through the participation of friends, and as such, Facebook won’t replace traditional search on the Internet. However, it is effective for recruiting and marketing because its applications are designed to use viral marketing processes. It builds an ecosystem much like any other human organization.

In Facebook, there are those who join to grab information, those who like to give information, those who simply look around and not actively participate, and those who join to shape the activity of the group.

As a result, it becomes relevant to all age groups that businesses need to target. Affiliating with Facebook lets business show it understands its customers. Facebook also offers a forum for customers to offer solutions.

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15 Comments For This Post
  1. Derren Says:

    Some nice tips you’ve shared here.

  2. John Says:

    Good article. My company is looking at Facebook especially for its effectiveness to the over 40 crowd.

  3. Paul Says:

    Very interesting article. Mr. Narciso seems to be onto something. As an owner of a business I agree that the cost of attracting talent through traditional recruiting channels can be cost prohibitive. Perhaps sites like Facebook may offer some assistance with this younger tech-savvy generation.

  4. Jeff Says:

    It will be interesting to see how CIO’s react to productivity and security concerns. The WSJ “Too Much Information” outlines the pitfalls off a highly integrated open social network. Although Facebook could be a very interesting tool for linking an employee’s needs to retention. I’m interested in Mr. Narcisco’s future articles.

  5. Scott Says:

    Well, here’s another option I had never considered for recruiting specific technical skills. Thanks for the insight.

  6. Tom45 Says:

    good insight. What about linkedin?

  7. Kyle Says:

    Splendid usage of high-level vocabulary. The insight provided here was simply the best I have ever seen.

  8. Emad Says:

    This is a very interesting article. Some businesses, as Paolo suggests, are taking advantage of this new model. However, traditional, larger organizations are going to have a difficult time adapting. The leaders of these organizations are not yet comfortable with the de-prioritization of hierarchical leadership and the renewed focus on collective intelligence and customers defining, designing and living the product.

  9. Paul Says:

    Great Article Paolo! Looking forward to the next one.

  10. Anna Maria Says:

    You made it easy for me to understand what Facebook is all about. Thus, I’ve found a new way of recruiting for my organization.

  11. Guwapo Says:

    Mag kasama ka?

  12. Mon Says:

    Great article. An individual with the proper mindset should be able to see thru the effectivity of facebook and using it in the proper manner…hoepfully, one that will fit your need.
    I certainly would endorse it to my over 40 crowd here in Las Vegas.

    Paolo, Happy Holidays!!!

  13. Gilbert Melgar = OI Says:

    Pretty good research, I learned a lot from what you wrote here, and I totally agree with you.

    Well we just have to maximize everything what facebook and other social networking tools that will come up in the future.

  14. Cencal Properties Says:

    good article ! Thanks to sharing this informative and interesting information with us.

  15. tenraj Says:

    nice article.. follow following link to know all facebook keyboard shortcuts
    http://webupon.com/social-networks/facebook-keyboard-shortcuts/

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