The 2011 figures released last month as part of Facebook’s initial IPO application revealed much that was once only a matter of external speculation. The data confirmed that Facebook has increased its users by an impressive 39% on the previous year, taking its number of worldwide users to an astonishing 845 million. Facebook was also commercially successful in 2011 with profits of £650m from revenues of £2.3bn.
Analysts, however, had expected Facebook’s revenues to be significantly higher and many of them described these results as “disappointing”. They may have a point. Facebook values itself somewhere between £50bn and £60bn. That’s five times the value of WPP and yet Facebook only generated a quarter of the sales that Sir Martin Sorrell’s outfit produced last year.
Until now, most brands’ social media ‘strategy’ has consisted of creating a Facebook page for free and then spending marketing money in the technological equivalent of a giant pissing contest to achieve more ‘likes’ than competitors. It’s high time, therefore, for Facebook to increase and expand the options for those who want to invest in advertising on its site. Last Wednesday in New York, Facebook hosted many of the world’s biggest brands and most influential marketers to update them on its new brand-friendly, marketing-savvy features.
Ramping up advertising on the site runs counter to Facebook’s brand heritage and risks killing the golden goose that laid many golden eggs
Those at the event were shown how to advertise on the Facebook’s logout page for the first time and achieve a daily reach of 37 million users. They were shown a new Reach Generator that could deliver messages on Facebook to more than 75% of a brand’s fans. Best of all, brands were told they were now allowed to post advertising messages directly onto a user’s newsfeed right there among their personal correspondence.
All of this makes commercial sense as Facebook attempts to ramp up revenue ahead of its IPO. But I wonder, as Facebook’s executives extolled the virtues of building brand equity to their big clients last week, whether their thoughts strayed to another brand of great importance – their own.
Ramping up advertising on the site runs counter to Facebook’s own brand heritage and risks killing the goose that has, so far, laid so many golden eggs. Like the rest of social media, Facebook works best when it acts as a medium that connects people. Irrespective of whether they are Syrian freedom fighters looking for a safe haven or Harvard undergraduates looking to get laid, the power of social media originates with the very human desire to interact with others.
But that picture becomes distorted when marketers attempt to barge into this inter-personal space with crass commercial agendas. Brands are the third wheel within social media because they don’t, according to the very definition of the concept, actually belong there.
I know a lot of deluded marketers who think that social media is a natural fit for brands and advertising, but they only think that because they no longer see marketing through the eyes of the market.
Consumers want to use social media as a genuinely social medium and they don’t necessarily want brands taking part. That was demonstrated by research from TNS showing almost two-thirds of consumers in the UK did not want to engage with brands on social media.
And it was clearly top of mind for the team from Facebook, who were intent last week on not only increasing the amount of advertising on their site but also on changing the nature of that advertising. “Our main objective is to make sure that the advertising is as good as the content you would receive from your friends or family,” Carolyn Everson, Facebook’s vice-president of global marketing solutions, told the assembled throng.
“It’s very similar to your own Facebook experience. There are certain friends that you probably love getting updates from, which is what we’re trying to do with brands. Stop thinking about brands over here and people over here and think of brands as people.”
It’s a fascinating turn of events. For the past century – ever since Karl Marx predicted that the capitalist system would eventually lead man to commodify himself – we have watched pop stars, models, footballers and even the charlatans who sell “personal branding” courses increasingly turn themselves into brands.
Now that equation is also being reversed. In 2012 people can become brands but, if Facebook is to be believed, brands can also behave like people.
It’s an evolution that Facebook has to engineer because how else can brands sustainably co-exist within social media? And how else will Facebook generate the kind of revenues that its new public investors will expect?