Market Overview

Ford and Coke Show Facebook Some Love


After losing the support of General Motors (NYSE: GM), two major corporations -- Ford (NYSE: F) and Coca-Cola (NYSE: KO) -- have announced that they will continue to use Facebook (NASDAQ: FB) to boost their marketing efforts.

According to the Wall Street Journal, both companies have endorsed Facebook separately -- and without Facebook's request.

The Journal quoted Jim Farley, Ford's VP of Global Sales and Marketing, who said that someone who "likes" you on Facebook "is substantially more willing to advocate the brand."

Joe Tripodi, Coca-Cola's marketing chief, was also quoted in the publication. "If we can get 40-million plus fans," he said, "or even some subset of them talking positively about the things we're doing, ultimately that's a good thing for us."

Neither executive provided detailed information explaining why they believe that Facebook is an effective marketing tool. But in a report released earlier this month, comScore (NASDAQ: SCOR) attempted to demonstrate the efficiency of advertising on Facebook. In short, comScore claimed that its research showed that "Facebook-earned media is having a statistically significant positive lift on people's purchasing of a brand."

Investors did not immediately react to the release of the report, which was previewed on June 7 and became available on June 12. But over the last four trading days, Facebook shares have been on the rise, leaping from a market close of $27.20 on June 13 to $28.30 on June 14. By the end of the next day, Facebook had climbed to more than $30 a share. This week, the company continued to rise, closing Tuesday at $31.93.

This a significant turnaround for Facebook, which endured massive losses in the days following its IPO as investors questioned the company's business model -- particularly its ability to monetize 900 million users.

Despite the negative reports, some investors had a positive view of Facebook from day one. "They have 2,500 amazing technologists, and they get the pick of the litter," Tom Sosnoff, the co-founder of thinkorswim and the CEO of tastytrade, Inc., told Benzinga during a recent interview. "And when you think about a company that can support 700 or 800 million users without a technology glitch, their ability to create technology is off the charts."

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