Lollipop Local

When Facebook reached 100 million users, Mark Zuckerberg realised that he needed to find a way to make money from the massive audience he had built.

He poached Sheryl Sandberg, a senior advertising executive, from Google. She had been in the company from the start and she knew Adwords. She could show him how to move into this lucrative area.

Sandberg is at pains to stress that Facebook Ads are completely different from Google Adwords. With Google you are on the web searching for something and Adwords gives you an ad that is integral to that search.

Facebook is not competing in the search marketing area – when you are looking for a product you go to Google not Facebook.

Facebook ads are like tv and magazine ads, they are there to tempt you with new products and ideas. It’s demand generation. You’re not in active searching mode looking for something to buy so Facebook helps you to desire something that you didn’t know you wanted when you are in discovery mode.

There are some experts who view this as betting on the future value of a customer and are not sure that such an ephemeral worth is a good reason to conduct advertising.

But Facebook holds one trump card, it lets advertisers reach large numbers of exactly the customers they want by tapping into the information those consumers have revealed about themselves whilst using the site.

When you place an ad, you can narrow down the whole of the Facebook population and target only the people who you think will want your product. There are 12 targeting criteria and by selecting the location, gender, age, interests and relationship status, you can niche down to the core demographic for your product or services. Although these advertisers don’t know your name or where you live, they know you as a number and can use that.

The availability of what is called big data makes Facebook the most valuable market research tool that has ever existed because it allows the advertisers to tweak their marketing message to tap into the psyche of those customers who are ready to buy.

Facebook ad agencies have been spawned on an industrial scale – but there has also been a big change in advertising methodology as a result. It has gone from an art form to a science where the guesswork has been removed through the use of software to conduct massive experiments on audience response to adverts.

Sandberg revealed that Facebook’s advertising revenue had risen from £272m in 2008 to £3.2bn last year but emphasised that, whilst this was significant progress ‘we’ve only just begun’.

But, having said that ‘Do you know anyone who has actually clicked on a Facebook ad…?’

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This entry was posted on Tuesday, May 22nd, 2012 at 7:27 am and is filed under Facebook. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.