Everybody wants to be liked. The question for Facebook Inc. is how much advertisers are willing to pay for the opportunity.
The centerpiece of Ford Motor Co.'s online campaign for the 2012 Focus was a free Facebook page hosted by an orange-colored puppet that in a few weeks won over a new, younger audience for the once-stodgy compact.
Ford spokespuppet "Doug" drew crowds to online conversations and videos that starred him clowning around the new Focus. Doug inspired more than 43,000 Facebook users to click "Like," the icon that broadcasts to friends a thumbs-up approval of a brand or product.
While Ford shelled out an estimated $95 million to advertise the new Focus across a broad range of media, it spent just pennies on the dollar for Facebook ads.
Most of its ads were for small advertisers, such as local businesses and small-scale websites, according to comScore Inc. Facebook is under pressure to grow its advertising on a grand scale, and to snag the sort of big brand names who now drive billions of dollars to TV, radio and print campaigns.
Doug's ad campaign shows Facebook's uphill battle. It mirrors the experience of other brands—including Progressive insurance, Intel and Pepto-Bismol—that chased customers to online social networks. After some experimenting, the companies found they could reach a target audience at a steep discount through what's akin to word-of-mouth campaigns that spring from free Facebook pages.
Such big online ad buyers as Ford, Verizon Communications Inc., Progressive Corp. and Scottrade Inc., ran less than 15% of their digital ads on Facebook in August and September, according to the first-ever tally of Facebook advertising by comScore Inc.
David Fischer, vice president of advertising and global operations for Facebook, said the company was witnessing "very strong adoption, growth and business results among the largest brands in the world."U.S. consumers spent 15% of their online time at Facebook in September, according to comScore. But Facebook is expected to capture just 6.4% of total online ad spending this year, according to estimates by research firm eMarketer Inc.
Companies are shifting marketing efforts to Facebook because that is where consumers are. In September, U.S. Web users spent an average 6.8 hours on Facebook, far more than on any other site, comScore said.
Facebook says 96 of the top 100 U.S. advertisers, as ranked by Ad Age, bought ads on its site in the past year. Of the world's 100 largest companies, 61% have a presence on the seven-year-old company, up from 54% last year, according to Burson-Marsteller.
But many of the largest advertisers say their spending is small compared with other sites and make up a small fraction of their total ad budgets. Facebook's global revenues in the first half of 2011 were "not as robust as I would have expected," said eMarketer analyst Debra Aho Williamson.
Facebook will take in less than one-fifth the ad revenues per U.S. user that Google Inc. will this year, eMarketer predicts. EMarketer expects Facebook's ad revenues to reach $2 billion in the U.S., from 162 million unique U.S. users, according to comScore; Google is expected to earn $12.8 billion in U.S. ad revenues from 184.6 million unique U.S. users, according to comScore.
"Clearly people think they can do a lot more than what they are doing today," said Ben Schachter, an Internet analyst with Macquarie Securities.
Facebook's pitch to companies is that advertising on the site builds brand awareness, along with a more personal relationship with customers. The company's strategy has been to lure marketers with free offerings—fan pages and the "Like" button—then sell ads to help drive viewers to the material they post. Mr. Fischer said the most successful Facebook campaigns combine free content with paid ads.
Social networks are different from Google's search engine, which sells ads linked to customer queries—many times when people are looking to buy. While Google advertisers can compare sales per advertising dollar, Facebook has teamed up in recent months with the media company Nielsen to experiment with new measures.
Ad executives say spending money on online content often is more important than buying ads. Ford declined to give exact figures but said 49 online videos of Doug cost about the same to produce as three 30-second TV commercials.
In April, PepsiCo's Frito-Lay division bragged it had acquired the Guinness World Record for the "most fans on Facebook in 24 Hours," some 1.57 million.
Facebook ads break new ground, said Mr. Bhargava, because they use demographic information volunteered by users—geography, personal interests and professions—that allow for targeted messages.
While marketers can assess the cost of a Like—more than $1 per user and climbing—they haven't yet figured out the long-term value of a Liker.
Ford found that only buying ads encouraging people to "Like" its autos didn't necessarily lead to long-term relationships. "You can give them money, and they can give you Likes," said Mr. Kelly, "but the question is, what is the value of those Likes?"
Among Facebook's recent successes: Sony Corp. is shifting 30% of its traditional ad budget into social sites, including Facebook, for its PlayStation console. Diageo, maker of Smirnoff and Guinness, committed in September to spending more than $10 million on Facebook ads.