Founded in 2004 by Mark Zuckerberg, Facebook has gone from a college photo-sharing site to a growing business-networking platform for advertising and multimedia interaction. But will Facebook ever drive the business of advertising? First ask yourself, why do advertisers go online? Going online allows better ad targeting and only targeting intended audience. Advertisers only pay when users click on the ad and track, which clicks translated to sales. Simply put, that leads to better measure of return on investment because of closer connection to buyers. Advertisers pay more for views by targeted individuals because of the increased likelihood to convert into a sale.
What does Facebook offer advertisers? The main advantage on Facebook for them is to reach the target customers. Facebook is connected with more than 500 million potential customers. According to Social Media Today, it is estimated that 42% of the United States population has a Facebook account and today more people visit Facebook than Google. Advertisers can choose the audience by age, location and interests and test simple image and text based ads and use what works. So advertisers can make changes to maximize the results and track the progress with real-time reporting. With Facebook, people use it daily to check their Facebook profiles, their interests, sports, and what they do with their free time. For advertisers like Procter & Gamble, social networking sites like Facebook are giant databases about potential customers offering information advertisers normally pay huge money for.
Facebook now has the opportunity to serve ads by people and the preferences and the networks which they are connected to. Facebook has something that Google will never have. Facebook has demographic indexing. Procter & Gamble likes that Facebook reaches a highly targeted demographic efficiently and cheaply. Facebooks algorithms pick up on behaviors from users “fanning” and groups a user joins.
Procter & Gamble is concerned that Facebook does not touch older people and people who are resistant to new technologies. Advertisers pay for many false clicks. Procter & Gamble is demanding new, more precise measurement data. Procter & Gamble would accept the Media Rating Council standard on ad view ability and work with third party measurement companies that are accredited by them in an effort to change the situation.
So how can Facebook improve its advertising revenues and become the advertising leader? The strategy of this social-networking is well known. The system is good and attracts more and more users every day. I think that Facebook can be number one by increasing the number of its users. Facebook can do this by creating attractive games to lure users and feed its databases. According to Social Media Today, Facebooks traffic is a third of the cost of its competition. But how long will Facebook stay this cheap? Facebook has started to provide its marketers with new data on display ads, including the milliseconds they appear on a screen. Facebook’s actions on media transparency are a positive step forward.