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FACEBOOKTHE GROWTH OF AN ADVERTISING GIANT
SO, YOU’RE A MARKETER…
Works at HubSpot
About
You know Facebook, right?
We thought so too. Until we realised just how much we DIDN’T KNOW about their advertising strategies over the last few years.
I mean, did you know that the first way to advertise on Facebook was through ‘Flyers’ and they have a ‘Marketplace’ where you can buy and sell your stuff?
WE DIDN’T! So we decided to share their story with you because as marketers we need to closely watch the trends in advertising, and with Facebook being such a big player, we can’t afford to miss a trick!
SO LET’S START AT THE BEGINNING
RecentRecent
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Founded
Mark Zuckerberg launches ‘Thefacebook’ at Harvard University. It quickly starts to spread like wild fire.
Imag
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It looks like this
The majority of revenue comes from ‘Flyers’ which are mostly purchased by students or small local businesses for $10-$40 per day who want to target an ad to a specific college campus.
Source: Quora.com
Flyers are advertisements displayed along the side of the Facebook homepage and are controlled by Facebook.
They are mostly used by Facebook members to advertise parties or other social events on campus.
They look like this
Image source: College Web Editor
And make up most of Facebook’s revenue for that year
Image source: College Web Editor
They look like this
Facebook later changes it to an auction-based CPC model, called Flyers Pro.
Advertisers can set a max price for what they’re willing to spend and can target based on gender, age, location, political views, relationship status, education status, and workplace.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
1,000,000,000
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👤400,000$382,000
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It looks like this now
THEFACEBOOK CHANGES ITS NAME TO FACEBOOK
They have one full time ad salesman, Kevin Colleran. His first big ad deal comes from Party Poker.
They buy ads on a CPA (Cost per acquisition) basis, a flat fee of $300 for each new subscriber who signs up and puts at least $50 into a gambling account.
Source: The Facebook Effect
It is a HUGE deal for Facebook’s revenue and brings in $60,000 each month just for the 200 members on average who sign up!
Source: The Facebook Effect
It swiftly comes to an end though, when a year or so later gambling is outlawed in the United States, and Facebook drops Party Poker.
SURPRISINGLY, SOME MAJOR COMPANIES ARE ALREADY JOINING IN THE FACEBOOK ADVERTISING PARTY.
Apple is one of the biggest revenue generating advertisers in 2005 for Facebook.
They sponsor an Apple ‘Group’, which pays Facebook $1 per month, per member. As the Apple group grows, Facebook begins to make hundreds of thousands of dollars per month.
Another big player in the sponsored group game is Victoria’s Secret. Facebook requires them to make a minimum monthly payment of $25,000.
Source: The Facebook Effect
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
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👤5 million$9 million
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Facebook allows everyone over thirteen years old to become a member.
The offers for partnerships and buy outs start to flood in.
MICROSOFT GETS LUCKY!
And becomes the exclusive provider of banner ads and sponsored links on the site.
Source: Microsoft.com
COMPANIES THAT TRY TO BUY FACEBOOK
Viacom$1.5 billion
Yahoo1 billion
MySpace
Microsoft$15 billion
News Corp
Unnamed New York Financier$10 million
NBC
Friendster
Google(twice)
COMPANIES THAT TRY TO BUY FACEBOOK
Viacom$1.5 billion
Yahoo1 billion
MySpace
Microsoft$15billion
1.6% stake sold
News Corp
Unnamed New York Financier$10 million
NBC
Friendster
Google(twice)
Declined
Declined
Declined
Declined
Declined
DeclinedDeclined
Declined
Declined
ZUCKERBERG HOLDS FIRM.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
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👤12 million$48 million
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It looks like this now
FACEBOOK LAUNCHES MARKETPLACE, AN APP FOR CLASSIFIED LISTINGS.
It is used to list what you have and what you want within your networks.
Random fact: This idea was catalyzed by a mock-up built entirely in Excel by Josh Pritchard.
WAIT, WHAT?Facebook had a Buy and Sell Marketplace?Is it still going?
YUP!
In March 2009, Facebook approaches Oodle, an online classified ads service company to take over the Marketplace.
Source: Facebook
They build an entirely new marketplace focused on giving people a place to buy, sell, or give things away to the people they know.
It still continues today and looks like this
FACEBOOK LAUNCHES THE MOBILE VERSION OF ITS WEBSITE
Facebook’s mobile website lets users surf Facebook on a website optimised for small screens. They can upload photos and notes, send and receive messages, wall posts, and pokes using SMS.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
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👤50 million$153 million
RecentRecent
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Founded
While the rest of the world falls into a recession, Zuckerberg steps up the advertising game at Facebook.
Any commercial entity can now create a ‘Page’ for free
The intention is that those Page owners will find ways to spend money through advertising their Facebook Page.
Facebook invests more in their mobile strategy and now allows members to comment on Friends’ status updates.
The service is so popular that nearly a million mobile comments are posted in the first 24 hours after the update’s release.
Source: Mashable
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
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👤150 million$272 million
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FACEBOOK BEGINS TO REALISE THEIR POTENTIAL FOR ONLINE AD DOMINATION.
And start to provide more advanced ad targeting options to their advertisers.
They introduce language and geographical based ad targeting to entice more advertisers
Page owners can set up and manage their own ads for the first time.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
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👤350 million$777 million 65 million
RecentRecent
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FACEBOOK RELEASES THE FIRST MOBILE APP FORFACEBOOK
And introduces the ‘Like’ button for external sites
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
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👤600 million$1.8 billion 100 million
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FACEBOOK INTRODUCES SPONSORED STORIES FOR DESKTOP
Users who ‘Like’ Ben & Jerry’s will see updates like this one in their News Feed.
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Advertisers can choose to highlight particular user actions so that we see their activity in our news feed.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
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👤845 million$3.71 billion 350 million
RecentRecent
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INTRODUCES MOBILE ADS FOR THE FIRST TIME
They appear within our News Feed so as not to interrupt our Facebook user experience.
FACEBOOK INTRODUCES THE SOCIAL GRAPH
When a user friends another user, Likes a page, comments on a photo, listens to music, or plays a game, a connection is written to the Social Graph, which is then provided as data for advertisers.
All of these stories and the subsequent connections create valuable and compelling marketing opportunities for businesses on Facebook.
FACEBOOK INTRODUCES THE FACEBOOK EXCHANGE
It’s a new way of purchasing Facebook ads through real-time bidding. Advertisers and agencies are able to use cookie-based targeting to reach their audience on Facebook with more timely and relevant messages.
Source: Facebook
Facebook Exchange advertisers use first-party and third-party data to decide who to serve ads to. First-party data refers to the cookies that sites and ad networks put on users browsers, and third party data is information collected by research firms and data brokers.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
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👤1.06 billion$5.85 billion 543 million
RecentRecent
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FACEBOOK INTRODUCES LOOKALIKE AUDIENCES
Which help advertisers reach potential customers who share similar characteristics with their current ones.
Advertisers are able to upload their customer profiles, referenced by emails or phone numbers, and then Facebook targets a similar profile of Facebook users for the advertiser.
The personal information of the lookalike is never given out.
Re-targeted ads now appear in the News Feed.
They mimic the look of Sponsored Stories, but are aimed at users based on their browsing history outside of Facebook.
It takes data from the Facebook Exchange Program (external sites) and places ads in the News Feed instead of just the right side bar.
Advertisers can now create Unpublished Posts or Dark Posts that intentionally do not appear to all fans of their page.
It means advertisers can post an ad to their Facebook Page and choose WHO from their fan base to show it to, based on all the usual targeting criteria AS WELL as interests.
Mobile has climbed steadily upward as a percentage of Facebook’s total ad revenue. It grew from 14% to 23% to 30% and now made the biggest quarter over quarter jump to 41%.
Source: AdAge Digital
“ As of June 30th, there are 819 million mobile monthly active users on Facebook, up 51% over the previous year.”
Ad Age Digital
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👤1.15 billion$1.18 billion 819 million
SO WHAT’S NEXT?
Facebook has started to release regional data for the first time to help advertisers understand how people use the network.
It is also part of a larger push to go after dollars earmarked for TV commercials, the top choice among advertisers when they launch campaigns.
Source: yahoo news
“ The average time spent daily with digital media is expected to surpass TV viewing for the first time this year, according to eMarketer.”
And Facebook’s ad revenue is estimated to reach $7.64B by 2014.
SO IT’S TIME TO START THINKING ABOUT YOUR ONLINE ADVERTISING STRATEGY, PEOPLE!
Are you taking full advantage of all of Facebook’s advertising features?We compiled the best tips from four top European experts on the subject, so you can become a Facebook Advertising Master! Download your copy here
http://bit.ly/1aEtMCH
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