Feeling sore that you didn’t get your Facebook “pop”? Investors might be fuming that the IPO of the much-vaunted Silicon Valley firm has turned out to be a gigantically inverted ‘Like’. But for a select group of Chinese companies, Facebook is starting to pay off quite nicely.
Shortly before Facebook’s initial public offering last month, General Motors announced that it would no longer be buying ad space on the site. The carmaker spent $10 million last year but had concluded that the results weren’t good enough. That was a blow for Mark Zuckerberg’s firm. But fortunately for him, advertisers from China could offer a way to plug the commercial hole. Facebook is blocked in China but it hasn’t stopped consumer firms like Haier and Lenovo from tapping its 900 million user base in an effort to raise their global profiles.
Take Haier: one of the first white goods manufacturers to advertise on Facebook. That’s because most of its competitors didn’t believe that buyers of home appliances are particularly young or internet-savvy. Haier thought otherwise, and has been buying ads since 2009. It also has a fan page on Facebook (which it does not pay for) promoting its products.
The effort seems to have paid off. According to marketing agency WPP, since Haier established its Facebook presence, the number of consumers recognising the brand in Europe has gone up from 10.8% to 14% in 2011.
The company, which has been selling its refrigerators in the region through Germany’s consumer electronics chain Media Markt, has seen its sales jump too.
“Facebook has been instrumental in raising brand awareness for Haier in Europe,” Sun Shubao, president of Haier Europe, told Global Entrepreneur.
Smaller companies have also been getting a Facebook boost. Beijing-based lingerie maker Aimer started its Facebook page last June and has also been buying ads on the site targeting communities that have overseas Chinese populations.
China’s Firmoo has even built a business model around Facebook. The online eyeglasses retailer has been shipping spectacles primarily through its page on Facebook. The company, which also runs ads on the site a few times a day, has full-time staff creating daily promotion and product news, and responding to online queries.
Firmoo now has 460,000 people who “liked” its branded page, compared to competitor Eyebuydirect, which is straggling with just 5,000 fans.
Lenovo, which boasts over 600,000 fans on the social networking site, also has a special social media team based in Singapore, which handles its ads and posts on Facebook.
Like GM, others query whether advertising on Facebook is worth the expense. Vancl, one of China’s largest online apparel retailers, hired an ad agency to build a brand page on Facebook but user engagement remains low. Since the beginning of this year the company has stopped investing in the site, says Global Entrepreneur.
Other observers complain that the advertising opportunity on Facebook is not as targeted as Google’s search-based ads. As a result, the click-through rate is low. There is also grumbling about Facebook not having a dedicated sales office for its Chinese clients. Currently the social network is serving mainland customers from Hong Kong, which is said to lead to slower response times.
Until now, discussion of Facebook’s China strategy has concentrated on market entry, although many doubt that it will ever find a way to convince regulators that allowing millions of local Facebook accounts is a good idea. Luring more Chinese companies to advertise on its pages globally could be a much more productive approach. Who knows? Success here might even be the one way to get Facebook’s stock back up to its IPO price.
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