The Year That Was – Facebook

There is an old joke which many of the newer marketers, due to their age, might not even get, one almost sure to become obsolete by the time they have kids. It goes, "What is black and white and red all over? A newspaper." Technically, it would read "What is black and white and read all over," but that almost gives away the joke, taking away the play on words which is the punch line. Today, that joke might look something like, "What is blue and white and red all over?" The answer would be Facebook. It has, for millions of people, become a staple of their daily lives, garnering the type of can’t start or go through my day level of importance that the newspaper holds for a generation raised without the internet. That level of usage and engagement spawned multi-billion dollar advertising annually, which as most know, because they don’t read the paper, is experiencing a slow and painful decline from prominence. Not Facebook. It has enjoyed a meteoric rise, one that saw it overtake its earlier rival, and in perhaps less time than it took Google, has gone from trend to mainstay. More importantly, since Facebook must also earn a living, it has become a mainstay of marketers, so much so that the company, despite its massive overhead has actually turned profitable.  

Take a look back over 2009, here are some of the themes that emerged.

·        Maturity – Facebook has grown-up, and it has grown up fast. As we mentioned in the opening paragraph, they are a part of the ad landscape. In some ways, that maturity is bittersweet. This time last year was the tail end of a pretty special occasion that we experienced perhaps only once before. It was when inventory outpaced advertisers by such a margin that the threshold for success meant so many with a little time could make some incredible returns very quickly. The company is as important today as it was during the early stages of accepting ads, but the landscape and the feel of the ad environment is vastly different than it was even six months ago.

·        Self-service – Those marketing pre-Google 2002 had it rough. They still built landing pages, but the numbers of marketers paled in comparison to today, and the self-service interface has made the proliferation possible. It allows anyone to become a marketer. And, Facebook has taken it a step further. They have found ways to get us to spend money that we didn’t even anticipate. We can promote a third-party website, but if you have your own brand, you can create a page for it and then spend money with Facebook to give it fans. The value of fan pages is still being worked out, but the genius has been, like Twitter, to get so many using something they were happy not having previously and now spending money to promote. Yahoo/MSN might still be bigger in terms of the self-service marketing dollars they garner, but it won’t last too long. Facebook’s self-service platform is a multi-billion dollar one in the making.

·        Targeting – Much of Facebook’s self-service success comes from its targeting options. Google has trained the buying world to think in terms of keywords. Facebook on the other hand has us thinking in terms of audience and attributes. They don’t worry about the context of the page, only the context of the user. It was a gamble in some respects, but it was the only real choice available. The good news for Facebook, it works. Those in the performance marketing space have made the most of it, slicing audiences every which way to create both a more personalized experience and to figure out pockets of traffic that convert on the offers.

·        Policy – Going part and parcel with the maturity of Facebook, the changes the company made to what ads they allow has shaped less the rest of the marketing world but very much so the performance marketing space. This year saw a crackdown on two mainstays of the performance marketing space – free trials and mobile. Earlier this year a person could promote a flog and have it approved. They could use a picture of Oprah to promote weight loss, tell someone they were rich for work from home, and tell them a friend called them stupid.   No longer. You can run some free trial – some mylife affiliates still crush it, but as quickly as the site became popular for floggers and mobile subscription offers, so too were those privileges taken away.

·        Differentiation – Much like Google now has very distinct traffic sources in the minds of marketers, namely search and content, so too does Facebook. It has a self-contained but two very different parts of the Facebook universe, and the difference between them became more distinguished to marketers. Facebook is not just the self-service ads on the right hand side of the page. It is also the two types of inventory created as a result of Facebook’s game-changing decision to empower third-party developers to create applications within the Facebook environment. The first type resembles more traditional display ads, and they can be inserted by developers on pages of their applications. There mobile ads ruled, but it is an inventory that like traditional display is struggling. The second and much larger part of the universe is the world of virtual goods and the virtual currency system created to enable it. Despite the fancy name, it looks and operates like a modified offer wall from the incentive marketing space, and it is on its way to becoming a billion-dollar per year business if it doesn’t implode first.

What’s Next?  Ad Automation and Proliferation. The future is looking really bright for Facebook and even better for those early adopters with technical prowess. Part of the Facebook opportunity was its one big frustration – that everything was done manually. Each ad, each campaign was done by hand, and to get around using some script to automate the task was actually a violation of their rules. Now, Facebook has released APIs for marketers, and it will do for them what it did for Google. It’s impact will be quite significant, and it will be perhaps this time next year that we reflect on how much the landscape has yet again changed. Ads, though are just the tip of the Facebook iceberg. The company looks to own our identity and its emphasis on Facebook Connect will transform the web in ways we can only wait and see.