After seeing a few stories like this, it seems facebook advertising makes sense for one thing: buying likes. When one of us sees a site with 11.2K likes, we would know better. But the average user might not.
Fake it until you make it.
Fake it until you make it.
They then used the number of likes they had amassed (~200k) to get funding for their new product. It worked. Everyone took them much more seriously when they mentioned how many fans they had on Facebook. They were even able to attract licensing deals from some fairly big brands because their Facebook page looked so impressive.
Of course, this starts to some extent from Facebook: the small businesses reporting their "successful ad campaign" are more or less passing on the low-quality metrics that Facebook gives to them. Some businesses are aware that these metrics are crap, but then Facebook itself is also aware...
But then how will he explain his investors that his 200k "Fans" are generating 0 revenues ? :)
It's worse than useless, it damages your ability to use facebook as a means to connect with your customers in the future.
This is why the SEC has rules barring non-sophisticated investors from investing in equities.
This company is bankrupt now.
A lot of business activity is fads. Social media will probably always be a big business, but it seems likely to me that companies have been rushing into it part not knowing what it is worth, part knowing it may not be worth it but it sounds good.