Is Facebook advertising still a cost-effective and trustworthy advertising medium for the hospitality industry?

Edgerank and Promoted Posts
As we all have noticed, the cost of a corporate Facebook presence has dramatically increased over the last year.  After going public, the network is facing pressure to increase profitability which is clearly being dealt with by coming up with new ways to charge business pages.  By raising awareness about their Edgerank feature, which limits the number of fans that see content shared by a page, Facebook is now able to charge a significant amount of money for a feature that was the very platform of Facebook’s advantage in the first place – the ability to easily communicate with your entire fan-base quickly and easily.

Facebook’s promoted post feature now charges approximately $5 – $20, at a minimum, to reach a page’s already earned fan-base, depending on the size of the page.  The cost of acquiring fans for a page is pretty high to begin with, when you take into account all the different features that most hospitality businesses utilize to build their pages such as sweepstakes and pay per click ads.  The fact that Facebook is now charging an additional fee for the ability to reach the fans, who have already expressed interest in seeing the content, in my opinion, is like charging extra to use the silverware after you have just ordered a meal in a restaurant. 

Edgerank is not a new feature to Facebook, but it has been in the spotlight since Facebook released their promoted posts feature and almost simultaneously began to publish reach numbers below posts visible to page administrators on their Timelines.  Prominent marketers Jeff Doak and Geoffrey Colon both assert that Facebook has, as of September 21, 2012, reduced Edgerank levels of all pages by about 45% on average (Business Insider.com), making the use of promoted posts a necessity in order to effectively run a page.

Fake Accounts and “Contesters” on Facebook
Facebook is suspected to have just over 130 million fake or duplicate accounts (Shane Richmond). Many hospitality Facebook accounts are suffering from a flood of fake or uninterested fans on their pages, especially the ones that run contests and sweepstakes.  I had a firsthand experience with this when I was running a contest on Dispenser Amenities’ page, Facebook.com/ecotravelers.  I created a contest where people would vote on the best eco-travel stories from other fans.  Halfway through the contest I received an email with the subject line “get 1000 votes for $2”.  The spammer had mistakenly identified me as a contest participant instead of the administrator.  The body of the email described that the sender had created a plethora of fake accounts that he could use to help me win Facebook contests.  He assured me that all of the accounts had proper “North American style” names complete with profile pictures and legitimate email addresses. Fortunately, I did not see any suspicious activity on the page during the contest and I suspect that nobody took him up on his offer.   However, if this is happening on our page, which is very tame and offering a prize that was not terribly exciting, then I’m sure that this sort of thing takes place commonly when their are larger prizes at stake.

Another challenge with brands running contests and sweepstakes as a method of acquiring new fans, is that many of the people that take part in your event do it as a hobby or, in extreme cases, as a way of life.  These people have absolutely no interest in your business, offers, or online presence; they simply located the Facebook page through a listing on a forum, search, or from other contesters, as they do with many contests/sweepstakes every day in an effort to maximize the amount of prizes they are eligible to win.  Their Facebook profile is used only to enter contests and they also have an email for this same purpose. They will only be interested in reading email identifying that they have won something.  As opposed to fake accounts, these are real people who will likely receive messages, but are highly unlikely to participate in conversations or travel to your location.

The Like Wars
Every time I have heard brands compared on the basis of their social media presence, it has always come down to the same thing – who has the most likes on their page.  In this article These 20 Brands Lost-the Most Facebook Likes the Day of the Fake Fan Purge, Laura Stampler, of Business Insider, compares top Facebook advertisers and how many likes their pages lost when Facebook purged some of the fake profiles from the network.  Some of the pages lost over one hundred thousand fans in a day!  My point is that Stampler and, from the sound of it, the businesses themselves considered this to be an significant loss to their Facebook presence, when in reality they lost nothing at all.  In my opinion, the driving force for the revenue of hotels and other hospitality businesses on social media is not in the amount of likes they have on their page. Even the content of the page itself is going to take second place.

True Success
The true measure of success is what people, who have been to the location, are saying online about it and if they would recommend it to their friends.  In the article, Effects of Social Media on Travel and Hospitality, Jonha Revesencio highlights information taken from a Four Pillars Hotel study claiming that 92% of consumers say they trust earned media, such as word-of-mouth and recommendations from friends and family above all other forms of advertising and 52% of Facebook users said their friends’ photos inspired their holiday choice and travel plans.  This exemplifies the idea that the most important measure of social media presence for hospitality businesses, has very little to do with how many likes they have on their page, or anything else they are doing online.  Instead, it is the direct reflection of the quality of service at their location and the resulting satisfaction of their guests that leads to increased revenues delivered by social media.

This leads me to believe that success for hospitality locations on Facebook, if you take away all of the “persuaded” fans, is simply a measure of how well they are doing offline, so Facebook is put to much better use by paying attention to and acting on information passed from the users to the page, not vice-versa. That being said, the provision of quality visually-stunning social media content that shows off the best features of your location in a way that, should your true fans (satisfied customers) look up your page, they will find the content they need to convince their friends what a great place it is to go, will  go a long way to help attract new customers. 

So is it still a cost-effective and trustworthy medium?
Cost-effective yes, trustworthy not so much. Despite the recent increase in the cost of reaching fans with posts, Facebook ads are still very comparable, price wise, to other competing forms of online advertising such as Google AdWords.  The trust issues I am having certainly pertain to the future value of any investment spent on acquiring fans for business pages.  If all of a sudden it now costs money to reach our hard-earned fans, what additional costs will we be exposed to in the future?

by Michael Faulds

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