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Facebook Advertising: Advantages and Disadvantages

Facebook Ads

Jude Lucien

on 7 July 2010

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Transcript of Facebook Advertising: Advantages and Disadvantages

Facebook Advertising: Advantages and Disadvantages
Presented by
Claudine Cleophat
Jonathan Bilthuis
Jude D. Lucien
Facebook History October 28, 2003
Mark Zuckerberg wrote Facemash, while attending Harvard as a sophomore. January 2004.
Zuckerberg began writing code for a new website (Thefacebook). February 4, 2004
Zuckerberg launched "Thefacebook", originally located at thefacebook.com. 2005
The company dropped "The" from its name after purchasing the domain name facebook.com in 2005 for $200,000. August 26, 2008
Facebook reached
100 million users April 8, 2009
Facebook reached
200 million users September 15, 2009
Facebook reached
300 million users February 5, 2010
Facebook reached
400 million users August 2006
Facebook signed a three year deal with Microsoft to provide and sell ads in return for a revenue split. 50% FB users are active daily

The average user becomes a fan of four pages a month

The average user belongs to 13 groups

More than 20 million FBers become a fan of something EVERY DAY

In February 2009, FB ranked its fan pages. Barack Obama came in first, Coca-Cola came in second and Nutella came in third with 3 million fans.
Facebook Fans How does Facebook Ads work? As of April 2010, the like buttons have been added on various websites, which allows Facebook to launch ads based on your browsing history
Facebook does not allow unnecessary capitalization, irrelevant and inappropriate images, incorrect grammar. Facebook allows advertisers to set their target market based on location and demographics. As advertisers set their targets, FB will provide an estimated target reach based on information entered. Facebook allows you to set a daily budget. Minimum is $1.00. Facebook then suggests a pay per click amount based on your budget and information you’ve entered. You can also pay per impression.
Advantages vs. Disadvantages Ad Age:
Facebook is halfway to its goal of 1 billion global users
Facebook plans to expand to key markets such as China, Japan, Korea and Russia.
Ad Age:
The Syncapse approach vs. The Vitrue approach
The average value of a fan varies from $136.38 - $3.60. (Syncapse and Vitrue study)
The Syncapse
Product spending -- Facebook fans spend, on average, $71.84 more than non-fans over a two-year period.
Loyalty (meaning ability to influence and promote brand loyalty within a target audience) -- Facebook fans are 28% more likely to continue using a brand than consumers who are not fans on Facebook.
Propensity to recommend -- 68% of fans are "very likely" to recommend a product to family and friends (as opposed to 28% of non-fans).
Brand affinity -- 81% of fans feel a connection to the brand (versus only 39% of non-fans).
The Vitrue
•Facebook fan base that posts twice a day can deliver 60 million more impressions/ month. Here is a recap (and many thanks to Webtechuniverse's blog post) of the formula: 1M impressions x 2 posts x 30 days = 60M impressions 60M impresscions / 1000 x $5
CPM = $300,000 $300,000 x 12 months = $3.6M $3.6M / 1M fans = $3.60
Read Write Web
Facebook allows advertisers to create a profile of the segment of clients they want to advertise to, and advertise only to that audience. This is called people targeting. By advertising this way, you can reach a more targeted and broader audience.
Advertisers have the opportunity to alter their ads in order to appeal to specific demographics, instead of having one ad that can be viewed by everyone

Disadvantages Online Blog
Facebook has millions of users, it can be difficult to build relationships.
Facebook is addicting, and can take away from your actual work.  If you have an addictive personality, be careful with this one!
Depending on the business, Facebook does not allow the face to face contact that may be necessary.

Read Web Write
People don't go on Facebook to shop, they go on Facebook to... hang out!!!

What is Facebook? Facebook is a generalist social networking site.
Facebook has something for everyone, and attracts audiences regardless of age, race, gender, or interest.
Facebook enables users to stay in touch with large groups of friends, meet new people, express artistic creativity, and other entertainment-based activities.
Facebook provides users with their own profile, which they can customize by adding their picture, headline, and personal information.
How much does Facebook Ads cost? There is no set cost for Facebook Ads.
“Bid estimator" will show you the range of bids that are currently winning the auction among ads similar to yours.
Case Studies CM Photographic
Target their exact demographic: 24-30 year old women whose relationship status indicated that they were engaged.

In 12 months, CM made nearly $40,000 in revenue directly from a $600 investment.

Of the users who were directed to CM Photographics' website from the ads, 60% became qualified leads and actively expressed interest.
Alex Iskold
Despite inserting basic personal information - name, home town, date of birth and relationship status.

Facebook k does not know Alex’s book tastes, does not know that Alex is running a startup, does not know that Alex like Cabs and Pinots.

Facebook does not really know sophisticated things about people.
Facebook does not know much about users.

The data that Facebook has is not structured.

People are not coming to Facebook to click ads
Facebook Ads give brands and businesses an opportunity to create a presence on Facebook.
Why use Facebook Ads? You can target your ad by location, sex, age, keyword, relationship status, job title, workplace, or college.
Brands and businesses can customize their Facebook Ads to maximize user interaction and interest.
Facebook Pages are free to create and maintain.
Full transcript