Happy Birthday Facebook, now let's talk business
As Facebook turns 10, it shows a recent surge in earnings, and is all set to don a strategic new avatar. From photos to videos to content, Facebook is ramping up its efforts across all avenues
Princeton researchers might claim that Facebook will lose 80 per cent of its users by 2017 and data might suggest that teenagers no longer find it the ‘in’ thing, but as Facebook completes 10 years, Zuckerberg and Co will be happy with the company’s recent surge in earnings.
It’s been a decade of ups and downs, with criticisms about the company’s mismanagement of its IPO and a perceived inability of monetising its potential. But over the course of the past couple of years, the company has proved many of its detractors wrong. Its renewed focus on advertising, especially on the mobile front, is finally paying dividends – revenue for Q4 2013 stood at $2.59 billion, an increase of 63 per cent as compared to $1.59 billion in Q4 2012, revenue from advertising was $2.34 billion, a 76 per cent increase from the same quarter the year before.
From a marketer’s perspective, the future on ‘The Social Network’ couldn’t look brighter. Let’s take a look at how Facebook has grown (and continues to evolve) as a major marketing force in the digital age.
Finally Getting Mobile Advertising Right
By far the most significant thing to have happened to the company (and to marketers) is Facebook getting its mobile strategy right. From zero contributions to revenue two years ago to constituting 53 per cent of the advertising revenue in Q4 2013, mobile advertising has been a major factor in Facebook’s success in the last couple of years, having shown strong growth every quarter. According to research firm eMarketer, in 2013 Facebook had a 15.80 per cent share of all mobile advertising dollars spent spend worldwide, up from 5.35 per cent in 2012. A strong driver for Facebook and advertisers will be the mobile as a significant marketing medium for years to come, coupled with an upward surge in mobile advertising spends. It has also been tinkering with auto-playing video ads for the mobile for some time now; something many marketers think will be a game changer. (Facebook video ads: New online battle in the making?)
A More Ad-focused Strategy
Every new feature or change Facebook has made in the last few years has had one ultimate objective – to create a sleeker, focused and an engaging medium for marketers to interact with customers, the operative word being ‘interact’. As users of social media grow increasingly wary of intrusive advertising and lean more towards ‘meaningful’ content, Facebook is positioning itself appropriately for this new shift. Even the ‘Facebook Film’ feature that it unveiled to celebrate its birthday showed strength in tracking user information. What has also worked for Facebook is keeping the native advertising as unobtrusive as possible, something which Google pioneered. And the new changes, like recommendations based on friend activity and tweaking the news feed algorithm, are all going to make native advertising even stronger on the platform.
Creating A Social Media Ad Exchange
Facebook landed on this boat early when it launched the Facebook Ad Exchange (FBX) In June 2012, the first-ever social media ad exchange. It allows advertisers to buy Facebook ad inventory that retargets users based on their past online browsing history. According to a December report by Business Insider, Facebook accounts for about half of the retargeted ad clicks on the web. The FBX service is only a small part of Facebook’s overall revenue, claimed COO Sheryl Sandberg at an earlier earnings call. However, it is clear that it is just one of the tools in Facebook’s revamped arsenal for advertisers. Last year, it released Custom Audiences, a new retargeting tool that is also available for mobile devices. Last week, the company announced that it was testing a system that will allow Facebook ads to be delivered to third party mobile apps.(Facebook tests ads in third party apps)
Not a lot was divulged, but the message is clear. Facebook, with its unique user profiling and targeting strengths, wants to emerge as the de facto leader in the digital advertising landscape.
The One-Stop Digital Destination
To take it a few notches higher, Facebook wants to become ‘the’ digital destination – for discovery, news and referrals. Over the last few months, Facebook has been altering its interface and features, identifying and integrating the best from competitors.For example, the revamped news feed seems to take a cue from Twitter. The news algorithmhas been improved to provide more relevant posts to users depending on their behaviour. Then there was the much maligned ‘Timeline’ redesign introduced earlier last year, kudos to Facebook for weathering that storm. The motive behind all these changes seems clear enough; Facebook’s top think tank wants it to become the ‘day starter’ for users; the place they go to learn about what’s happening in the world, much as one would do with a newspaper today. Currently, Twitter is the favourite social media source for news updates, but Facebook is driving more traffic to publishers as a study by Shareaholic in October suggests. The report claims that Facebook referrals were up by 58.81 per cent over 2012, overtaking Twitter (52 per cent) and behind Pinterest (66.52 per cent). (https://blog.shareaholic.com/social-media-traffic-trends-10-2013/)
Then there is the Instagram acquisition, which is currently being treated with kid gloves, but could see some major traction this year. From photos to videos to content, Facebook is ramping up its efforts across all avenues. Could we see branded content on Facebook one day, for example, friends watching their favourite football games on private groups together? It might not be as unimaginable as one might think.
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