Facebook – future of digital advertising

It’s no good. This terrible article from the Observer makes me want to share a few views on Facebook and its real significance to the marketing world. Here’s the first of a number of posts I’ll make on the subject.

The article’s contention is that even though Facebook now has 350m worldwide users “there’s no point in advertising to them” and that apart from a small group of digital natives “this is a massive audience that cannot be tapped”.

Here’s my counter-prediction: within 2 years Facebook will have taken at least 25% of Google’s pay-per-click market share.

The three most important reasons why are:

1. Scale: 37 million UK adults use the internet. Around 23 million UK people visit Facebook each month. So they already have a huge penetration of the online population. Members are generally active: the average user spends 55 minutes on Facebook each day. UK membership has a skew towards younger users, but this is broadly in line with the same general skew in internet usage. Facebook members are older and wealthier than you might generally suppose, and this trend continues every month because older users are the fastest growing group. In short: a very large proportion of the people that advertisers care about are already using Facebook regularly.

2. Data: Search advertising has proved to be potent and valuable because it targets people actively looking for products and services. But apart from the search term itself advertisers learn very little about who is clicking unless they go on to buy. Advertisers on Facebook get a wealth of information when people click through – and can also learn a lot about the people who don’t. Advertisers that drive response into fan pages or apps that access the responder’s profile enter a wonderland of data about their target audience (more on this in future posts).

3. They aren’t even trying yet: Facebook’s initial campaign management platform is basic. It’s very laborious to micro-target lots of different audience cells with lots of message combinations. Facebook has no DoubleClick equivalent to help advertisers plan and optimise campaigns. However, a UK company Techlightenment has developed an optimisation platform which sits on top of Facebook’s public tool – pushing targeting up and costs down. When tools like this are universal you won’t see those funny little ads for ‘perfect abs’ any more: they will be shouldered aside in a new advertising gold rush by major brands.

The question isn’t whether Facebook is going to become a major player in pay-per-click advertising. That is a certainty. The real question is what other marketing activity will be drawn onto the platform. In my view, Facebook will create new opportunities in terms of brand advertising and market research which might seriously upset the business models of people like Martin Sorrell of WPP unless they are paying very close attention.

No comments yet.