Facebook Is on the Right Track

    November 8, 2007

Over the past 4 months, I have written many articles on what the advertising face of social networks should  look like.  While I would like to think they were reading my columns (unlikely), I am happy to see my vision of user / community targeting is where it seems Facebook is heading.  I was actually surprised at how many of the people I spoke with at Adtech not understanding the potentially gigantic platform this can be.

Let’s start with the details of their new advertising program.  First, it enables marketers to build pages and spread their message virally among their network of fans.  It also enables consumers to broadcast their purchases on retail sites to their Facebook communities.  Lastly, it provides a dashboard for marketers to see how their campaigns are doing and gain valuable intelligence about their customers and brand advocates.

The key task for marketers on Facebook will be creating unique, interesting pages with fun applications that entice users to join the group.  Marketers can then purchase SocialAds through a self-service platform.  These are banner ads or newsfeed messages targeted to demographics or profiles of people who are friends of fans of the brand. 

SocialAds can be purchased on a CPC or CPM basis.  Presumably, ad space will go to a combination of the most relevant result and the highest bidder, or in other words, the one likely to drive the highest revenue.  Marketers can track their performance and gain information about their brand advocates using “Insight,” Facebook’s dashboard.

Perhaps the most interesting part of Facebook’s new advertising program is “Project Beacon,” which allows consumers to broadcast purchases on retail sites through their newsfeed.  For example, if I buy a Canon digital camera on Amazon, my friends could see that on their newsfeed, receiving a trusted recommendation.  This could result in more sales for the brand or retail partner, which could trigger more recommendations, increasing overall volume.

Facebook’s founder Mark Zuckerberg boldly stated that his new plan is changing the way marketing is done, transforming it from message-blasting to targeted conversation initiating.  That’s partially true, but I would say that the real transition in marketing has been from a primarily creative task to a more statistical one.  In business statistics, data are more important than conversations.

The data that marketers really need in order to have the right conversation with the right person or bucket of people consists of browsing behavior, content, search behavior, shopping history, and now social networking behavior.  Facebook is off to a great start at providing a portion of that data, but they could do so much more.  The key is to take the incredibly rich, valuable data that they’re sitting on and apply it elsewhere (similar to what Google did with AdSense). 

For starters, they could cookie their active user base, and make sense of the cookie pool. I would like to see Microsoft deliver relevant display ads to these users and their communities based on a number of data points, including search and social data.  It would be fascinating to see search and product and service purchase patterns within communities.  These data could be extremely valuable to certain advertisers.

Another key to retaining users’ interest will be integration with Microsoft Office programs, such as Outlook.  Any social network will struggle to remain hip over time, because, well, that’s the nature of hipness, it’s short-lived.  But if it’s integrated into the product that rules the desktop, people will still use it long after its lost the cool factor.

There are probably hundreds of other ways social networks could monetize their extensive user data.  What I know today is that Facebook has 50 million users. True, many may not be active, but a lot are. Many believe Facebook can ramp up to 200-300 million users globally sooner rather than later.  I am not going so far to say this is another Google Adwords, but I will say if executed correctly, Facebook will be at the top of each and every brand and direct marketers’ media buy.