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|How Facebook sells your friends
There were two obvious winners at the FIFA World Cup this summer. Spain took home the 13 pound, 18 carat gold trophy for its achievement on the field. Nike won the branding championship, thanks largely to a three minute commercial called "Write the Future," in which its stable of soccer endorsers fantasize about the glory or disgrace that might result from their play in the tournament. Hundreds of millions of people saw "Write the Future" on television. Before it blanketed traditional media, however, Nike launched the video on Facebook, the Web's dominant social network.
The video started as an ad on the site. Then it was passed from friend to friend, often with comments and members recommending it. In the resulting discussions, the clip was played and commented on more than 9 million times by Facebook users and helped Nike double its number of Facebook fans from 1.6 million to 3.1 million over a single weekend. Getting the ad onto Facebook cost a few million dollars, according to the companies. All that passing around was free. Davide Grasso, Nike's chief marketing officer, says Facebook "is the equivalent for us to what TV was for marketers back in the 1960s. It's an integral part of what we do now."
Marketers have long hoped to turn the Web into the perfect advertising medium. Pop ups on AOL, banners on Yahoo!, and search ads on Google were steps along that journey. But it's Facebook, the Palo Alto (Calif.) based social network whose life as a moneymaking business is only now beginning, that may be best positioned to deliver on the Web's promise.
The company has developed a potentially powerful kind of advertising that's more personal more "social," in Facebook's parlance than anything that's come before. Ads on the site sit on the far right of the page and are such a visual afterthought that most users never click them. These ads can evolve, though, from useless little billboards into content, migrating into casual conversations between friends, colleagues, and family members exactly where advertisers have always sought to be.
"The whole premise of the site is that everything is more valuable when you have context about what your friends are doing," says Facebook Nike Air Max 90 (www.2015airmax.top/) co founder and Chief Executive Officer Mark Zuckerberg, who started accepting ads on Facebook as a Harvard sophomore in 2004 in an attempt to cover server costs. "That's true for ads as Nike Air Max 2015 (www.2015airmax.top/) well. An advertiser can produce the best creative ad in the world, but knowing your friends really love drinking Coke is the best endorsement for Coke you can possibly get."
Critics' ranks grow
All this is cause for concern to Facebook's critics and their numbers among privacy advocates and politicians grow every time the social network pushes the boundaries of the service beyond what its users originally signed up for. People join Facebook to share their lives with friends, yet the information they reveal "is being used by strangers for completely unrelated commercial purposes," says Marc Rotenberg, executive director of the Electronic Privacy Information Center, which filed a complaint with the Federal Trade Commission earlier this year over changes to the social network's privacy policies. "That is a little unsettling."
Life Inc.: Zuckerberg and the rich kids
For now, Facebook's appeal to large brand advertisers such as Nike is at least partly a function nike air max 90 women shoes (www.2015airmax.top/nike-air-max-90-c-6/nike-air-max-90-women-c-6_7/) of its size. alone. In contrast, about 106 million people watched this year's Super Bowl the most watched TV program ever. According to Nielsen, Facebook users average about six hours a month on the site, dwarfing the time spent on old line portals such as Yahoo and AOL (each about two hours). Speaking at the Cannes Lions International Advertising Festival this summer, Zuckerberg said that reaching a billion members is "almost a guarantee."
Facebook will update the advertising community on its progress on Sept. 27 when, for the third straight year, Facebook Chief Operating Officer Sheryl Sandberg will deliver a keynote speech at New York City's Advertising Week. That's hardly the reason Facebook is permeating the national consciousness, though. The Social Network, a film written by Aaron Sorkin (creator of TV's The West Wing) and directed by David Fincher (The Curious Case of Benjamin Button), premieres on Oct. 1. It portrays Zuckerberg as cutthroat and conniving, an immature prodigy who cruelly betrayed friends during the company's early days. Three Facebook executives, who declined to be quoted about a movie they say takes license with the circumstances of the company's creation, worry that the film could cause members to question their own trust in Zuckerberg and the site, just when Facebook is aggressively building out its advertising business.
Advertisers, at least, haven't expressed any qualms. Executives at many big brand advertisers wax rapturous about the site and are betting heavily on it. "A year ago, Facebook was an afterthought," says Carol Kruse, vice president, global interactive marketing, at Coca Cola, which has more than 12 million Facebook fans. "As we go into 2011, Nike Air Max 90 (www.2015airmax.top/) it's fully integrated into our marketing plans, with a reliance and a focus on it."
Facebook's ad business is already beyond the promising stage. The company is expected to bring in revenues of $1.4 billion in 2010, Bloomberg reported earlier this year. That's about where Google was in 2003, during a similar time in the development of its now ridiculously profitable search ad network. Facebook, which remains private and has no immediate plans for an initial public offering, doesn't comment on revenue estimates. Sandberg says they're working with more major advertisers and earlier in the planning stages of their big campaigns.
Story: Zuckerberg to give Newark schools $100 million
As important as technology is to Facebook's success, Sandberg, 41, runs a close second. After working for Lawrence Summers in the 1990s at the World Bank and later as his chief of staff at the Treasury Dept., she moved to Silicon Valley to oversee the ad business at Google. In 2008 she left Google for the experience of running a startup and because she believed Facebook was the better bet to win in brand advertising, which accounts for 90 percent of the $600 billion ad market. "We are in a much bigger market than Google, and we have much, much more runway," says Sandberg.
Advances in ad targeting
John Wanamaker coined the advertiser's dilemma "Half the money I spend on advertising is wasted; the trouble is I don't know which half" nearly a century ago. Until the advent of the Web, it was hard to argue that the percentages, or even an advertiser's ability to track them, had improved much.
The Web has now advanced to the point that most large sites can serve ads based on a user's browsing history. Google, which intercepts users at the vulnerable moment when they're searching for information, has ridden its refined brand of targeting to $23.6 billion in revenues last year. Facebook takes targeting even further. If you recently got engaged and updated your Facebook status to reflect it, you might start seeing ads from jewelers in your hometown. They've likely used Facebook's automated ad system to target recently engaged couples living in the area. If your profile mentions your appreciation for old school hip hop, the right local wedding DJ can find you, too.
David Belden, founder of Residential Solar 101, a San Francisco reseller of solar panels, knows exactly who his customer is: male, around 55 years old, and with an environmental conscience often demonstrated in the ownership of a hybrid car. That's right in Facebook's wheelhouse. "I can target my exact audience, rather than trying to come up with a proxy for it," like looking at search terms or which websites people visit, says Belden, who was spending about $4,000 a month on Facebook earlier in the year before he was forced to rein in his marketing expenses because of budget issues. He adds: "If I was bidding on expensive Google keywords like 'solar,' I'd be going against guys with a much larger marketing budget."
Half of Facebook's members check the site every day. Most update their status, use Facebook e mail or chat, and upload photos without noticing the timid advertising on the side of the page. Limited to small rectangular boxes with a photo and only 160 characters of text, the average ad is clicked on by less than a tenth of a percent of the site's users, according to advertisers and analysts, including Greg Sterling, a San Francisco based Internet marketing consultant. Google ads, which are triggered by searches for specific topics such as "new diet plans" or "SUV or minivan" can draw clicks from up to 10 percent of all searchers. They are also far more expensive.
Those terrible click through rates limit the overall effectiveness of Facebook's targeted ads which would matter a lot more if all Facebook were selling was clicks. The site talks up more ephemeral measures such as recall and brand recognition, which it argues can be boosted by social activity that occurs around an ad. Facebook calls its ads "engagement ads," because they ask users to take action: play a video, vote in a poll, RSVP to Nike Air Max 2015 (www.2015airmax.top/) an event, or just comment or click a button to indicate that they "like" it. The "like" button, which Facebook has gradually attached to just about every piece of content on its site and others across the Web, is intended to convey a general recommendation to a member's friends. So while a great majority of users ignore the great majority of ads on Facebook, the numbers change when, say, an ad for a local restaurant is footnoted by friends' names: ("Jordan, Jen, and 3 other friends like this").
That social endorsement is a tiny mnemonic designed to make the ad catchier, and it works. Nielsen, which started measuring the efficacy of Facebook ads a year ago, says that if users see their friend "likes" an ad or has commented on it, they are up to 30 percent more apt to recall the ad's message.
Ad philosophy differs from Google's
If enough of your friends like or comment on the ad, the ad can escape its right side quarantine and jump into your main news feed, along with the names of your friends and all the conversation around the ad. The advertiser pays nothing for this migration. In the industry, it's called "earned media." (Think of a teenager wearing a Nike T shirt or Ellen DeGeneres enthusiastically talking about a product.)
Here's where Facebook's ad philosophy differs from Google's. The search giant operates under the orthodoxy of traditional media. Just as in a magazine or newspaper, advertising on the site is explicitly labeled and separated from its editorial content in Google's case, search results are separate from sponsored links. Ads on Facebook, however, can transform into casual buzz inside a user's news feed, the online equivalent of water cooler conversation. Twitter, which is only now starting to develop its own ad system, sits somewhere in the middle. It allows members to "retweet" ads to their followers, an action whose meaning, Twitter executives argue, is more powerful and less ambiguous than "liking" or commenting on an ad.
Facebook's promise to advertisers isn't to get consumers to buy their products or really even to get them to click through to their website. Instead, it wants to subtly park the advertiser's brand in the user's consciousness and provoke a purchase down the line. More immediately, it also aims to get you to "like" the brand yourself, which then serves as a sort of all purpose opt in, allowing the advertiser to insert future messages into your feed.
Advertisers love this setup for obvious reasons. It costs nothing for that company to speak continually to a user via his news feeds once that user has indicated he "likes" a certain brand. It also allows corporations viewed skeptically by the press to have unmediated conversations with their customers and to get those customers to evangelize their friends.
Ford, 7 Eleven, and McDonald's have all recently unveiled products on their Facebook pages, in some cases using their fan groups to help design those items in advance. Starbucks offers coupons and free pastries to its 14 million fans; BP used its Facebook page, with about 40,000 fans, to release statements and photos about its attempts to plug the oil spill in the Gulf of Mexico (and had to contend with a much larger Boycott BP page, with 800,000 fans). Other brands use Facebook to pursue what they describe as their product's "service mission." Special K's page dispenses nutritional tips; Nature Valley ruminates about national parks and nature photography.
"For what could be considered the cost of a 30 second spot, you have a year's worth of conversation with people who love the brand," says Jim Cuene, director of interactive marketing for General Mills, which owns the Nature Valley and Betty Crocker brands. Anton Vincent, marketing vice president for General Mills' baking products division, adds that Facebook allows the company to "leverage the loyalty" of its best customers. "If someone likes Betty Crocker and they tell that to 150 other people, they are helping us to market our brand. In some ways it's a more credible message to the community."