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Can Brands Market on Facebook Without Actually Spending Money on Advertising?

Many Are Using Free Resources to Build a Presence, but the More of Those That Are Used, the More Ads See Growth

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Prepping for its 100-day sprint to Tax Day in late 2011, Intuit, the maker of TurboTax, was looking to grow a Facebook fan base of roughly 50,000. It decided to build an app to test users' knowledge of tax-deductible items and then pledged to donate a toy for each person who completed the quiz. It made an investment in the low six figures on "Gaming for Good" that mostly went to charity and added 101,000 fans, according to VP-global media and digital marketing Seth Greenberg.

That story might suggest that it's possible to market on Facebook without allocating many dollars to ads, but Intuit didn't stop there. On Feb. 1, it bought one of the network's pricey "reach blocks" to deliver ads to 50 million users, including a poll about what they'd do with their tax refund. It drove the highly visible "people talking about this" metric to 170,000.

Though investment in Facebook is increasing, what's going into areas such as app development and community management is most likely only a quarter of Intuit's testing budget, which includes Facebook advertising. Mr. Greenberg said he thinks outlays on Facebook ads will rise when better measurements are established.

Investing in resources to support content is important, he said, but "I don't expect it to grow anywhere near the amount that we want to invest with Facebook."

Spending to power a Facebook presence is growing, with social-media-management system Vitrue reporting that the average number of community managers and other staff accessing its platform went up from an average of 2.8 in February 2011 to 5.3 in this past February.

But while estimates diverge on how much brands are spending on Facebook ads vs. "resources," the consensus is that ads will see a growing share.

Razorfish Chief Media Officer Jeff Lanctot said Facebook spending last year across its client roster showed an almost 50-50 split between ads and costs such as content creation, app development, community management and auditing. (Forty-nine percent went to Facebook ads,and 51% went to the other costs, which represent the total spent with Razorfish across social that didn't go to ads, to be precise.)

The more brands spend on their Facebook presence overall, the higher ads' share tends to be, said Colin Sutton, OMD's director-social media. He estimates that ads tend to compose 60% to 80% of the budget for clients spending $1 million annually on Facebook. But because baseline costs for content creation and community management don't rise dramatically for advertisers at the top of the scale ($5 million) the percentage of their budgets going to ads is even higher.

Facebook's change to the timeline format and rebranding of ads as "stories" is shifting how brands are spending on content and development, however. Before timeline, a lot of resources were put into designing tabs that could be used as landing pages, Mr. Sutton said.

Money is now being spent to develop social apps (similar to popular ones by Spotify and the Washington Post) that can inform users when friends have read or listened to something, as well as craft engaging status updates that can be propelled through media.

"Imagine if you're spending money on "reach generator,' " Mr. Sutton said. "The cost of putting up a bad post is really expensive now."

But for the brands most committed to social, the central role Facebook is making content play in media planning could keep spending on content in lockstep with advertising outlays.

A digital marketer with a $5 million budget looking to drive traffic to Facebook rather than its own site could feasibly be spending $2 million on content development and community management, with the balance going to media, said Scott Symonds, general manager at AKQA Media. In that scenario, 20% to 50% of the $3 million could be going to Facebook ads.

Mr. Symonds said a paradigm shift is taking place because of social media, with the percentage of a digital campaign's media spend going toward creative increasing from the legacy share of roughly 10% to 20%. Investment in a costly social app such as Spotify can pay off handsomely if it goes viral.

"If you create brilliant content, you don't have to pay so much to get the news out there," Mr. Symonds said.

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