How powerful is a Facebook "like" for advertisers?
(CBS News) NEW YORK - Facebook announced Wednesday that it's increasing the amount of stock it will sell Friday, when it goes public.
Analysts now predict investors will put a value of more than $100 billion on Facebook.
But another big number may be more important to advertisers: the number of times Facebook users "like" something.
Facebook executives have been traveling around the country, trying to convince investors that their company can make money.
We know it's a powerful way to stay connected to friends.
The question is: How does that translate to profits for businesses?
You may already like Quiznos, but if you make it official and "like" the company on Facebook, you get a free sub the next time you order a meal.
Why would the company give away a $5 sandwich, just because someone gives it a thumbs-up on Facebook?
"It actually builds an online loyalty base for us, which is really important," explains Quiznos CEO Greg MacDonald. "We've got approximately 600,000 people on our 'Face' page, and that allows us to communicate back and forth with them -- actually, sometimes on a daily or weekly basis."
What does Facebook still have to prove? New Yorker columnist Ken Auletta spoke about that with "CBS This Morning" co-hosts Charlie Rose and Erica Hill. To see the discussion, click on this video:
MacDonald is part of a growing push to make advertising interactive, using things such as the Facebook "like" button.
Is a customer who "likes" Quiznos on Facebook more valuable than one who doesn't?
"The advantage we get with Facebook customers," says MacDonald, "is that they've opted in and they've selected in to want to know more about Quiznos, so that allows us to engage and tell them more about the brand, which is really, really important to us."
Around the world, people post 2 billion "likes" to the social network every day. And almost every business wants a cut.
What's the value of those "likes" to businesses?
"It really depends on the type of business that you run and how much that data will be shared between your friends on Facebook," says Backupify CEO and co-founded Rob May. "How similar are they to you? Are they likely to buy the same products? Is there's a lot of overlap, then that's pretty valuable."
That's what Facebook will have to prove to get company ad dollars.
In an interview in November on "The Charlie Rose Show" on PBS, Facebook Chief Operating Officer Sharyl Sandberg explained noted, "Marketers have always been looking for that person who's not just going to buy, but spread the word to their friends. What we do on Facebook is we enable marketers to find that and then, if I do it on Facebook, I'm sharing with an average of 130 people. And so it becomes a word-of-mouth marketing at scale."
Marketing on the social network takes many forms.
Companies can buy ads on Facebook, or have fan pages for free.
General Motors decided this week that Facebook's paid ads aren't helping sell cars, but the company is keeping its fan pages. And sources tell CBS News GM is still spending $30 million on consultants to come up with a social media strategy.
Ford, on the other hand, is spending one-in-four marketing dollars on digital ads. Ford says 60 percent of people who "like" Ford on Facebook wind up shopping for Fords.
"It's actually the combination of paid and content that seems to be the most effective to date," observes Jeff Farley, Ford Global Marketing Vice President Jeff Farley.
Ford launched its most recent Ford Explorer -- not at an auto show -- but on Facebook. And Farley says the response was huge.
"Some of the metrics on our launches are much better than the Super Bowl," Farley says. "Not that we'd never do a Super Bowl -- it's just that, you know, we ourselves were surprised."
To see the Rebecca Jarvis report, click on the video in the player above.
