New Developments at Facebook – A Change in the Social Media Marketing Scenario

In the past few weeks we have been generating a lot of discussion on Facebook, its valuation ($15 billion), why Microsoft has probably paid such a huge sum to acquire a minority stake, et al. Here are a few developments at Facebook  that would excite investors and social media enthusiasts alike.  Facebook tries to be worth its while.           

 

 Engaging Communities in Advertising-         

Social targeting. In simple words, that means placing ads within social contexts. It’s important to note that products and services are consumed primarily within a social context. Authorities in the world of marketing are excited about social targeting because one of the main concerns for any firm is when, how and to whom they should market their products – and evidence from a recent study by Shawndra Hill, a Wharton Business School Professor suggests that social networks may be one way to answer the question of relevance. She says “We provide strong evidence that whether and how well a consumer is linked to existing customers is a powerful characteristic on which to base direct marketing decisions. Our results indicate that a firm can benefit from the use of social networks to predict the likelihood of purchasing.”. The study concludes that consumers linked to a prior customer — adopt a service at a rate three to five times greater than baseline groups.                                           

In addition, social networks can also be used to highlight key target audiences based on non traditional, almost psychographic kind of segmentations on the basis of interests, activities, and opinions – this is generally the shortfall of conventional segmentation and targeting. So there definitely is a lot of buzz happening on the ‘social media marketing’ scene (which WATConsult, our sister brand specializes in).            

 

Contextual Advertising on Social Networks-         

 It allows advertisers to choose the key words for which it seeks to generate clicks and simultaneously gives the advertiser an idea of how many people fit the description of being likely to click on that key word. (a handy research tool for marketers and an exciting tool for advertisers to view since they anyway get the option of targeting specific audiences and now they can also know what they are looking at in terms of sheer numbers). I do confess however that the numbers can be slightly overestimated since not everyone will probably click on the links. To counter that Facebook has used a Google style fee collection method of Cost per Click (CPC) and also Cost per Thousand or Mille (CPM).    

 

How exactly does it work? -         

To give you an idea, for advertising WATBlog on Facebook with keywords such as web, advertising, technology, blogging, India; FaceBook estimated that there are about 1,300 people who are likely to click on our link. In a sense this kind of estimate is good if delivered because in the future it will lead to added credibility in terms of accuracy for the Facebook advertising brand. Observing this also gives a sense of where advertising as a whole, and particularly web advertising is heading (if not already there) – advertising HAS to be contextual and this is the first big social network player after Google who has demonstrated that (although I am sure they learnt a lot from Google’s text book).    

 

Niche or Mass? -         

I have to confess however, that in terms of sheer numbers, 1,300 people for all the key words we highlighted is very small – miniscule in fact. So maybe advertising on FaceBook is great for niche companies (like ours) but probably for mass companies, the numbers may not deliver , at least not in India. Also one notices that in a bid to deliver more numbers, companies may start adding more keywords to their preferences (eg. WATBlog may start to add ‘engineering’, ‘computer’ etc – basically keywords that are not clearly related to WATBlog) and this may lead to loss of contextuality (which is the core USP in the first place)  

 

Where the power lies? (Or does it?) -         

Another leaf that FaceBook has taken out of Google’s learning is that makers of ads are allowed to customize their own ads. Everything from the headline to the description. Seeing this, one is overawed with respect to the barriers to entry (or lack of them) for advertising now! Anyone can be an advertiser and the emphasis is on creating a buzz – notice now that this kind of advertising is not doing much branding. The onus of branding lies with the page that the user is clicking on. So again, to reiterate, on the internet, your web page is probably your strongest branding tool (unlike in terms of mass marketing consumption products and related categories)  

 

The Replacement for Client – Agency Meetings!  -         

One can also see that FaceBook produces real time analysis for its advertisers (very similar to Google Analytics, thus they are constantly getting feedback on their advertising. So you don’t need any client agency meetings – saves time and also this is hard core quantifiable data. Again the onus is on the advertiser as to what he makes of the insights provided to him. This is an amazing feature of the internet in general – the onus and the power lies with the consumer  (in this case FaceBook’s consumer is the advertiser) and thus the advertiser creates, dictates, and executes content. The fact that content is in the hands of the consumer is easily the biggest plus of Social 2.0 (among other things) and its great to see FaceBook bringing in its core strengths and features into monetization exercises as well – a learning for e – businesses, especially content driven e – businesses.                  

 What is likely to be seen in this space with respect to Facebook in India? -         

I see smaller advertisers generating a lot of traffic from Facebook especially in India and this is again due to contextuality and low barriers to entry – you need about $5 or Rs. 200 a day minimum to advertise on FaceBook (mass media in India is more than expensive. About Rs. 3.5 lakh for a 10 second TV slot on Prime time television,  a full page ad in a Newspaper is a little more expensive – I don’t know the figures so I wont speculate!) Again notice that Facebook looks to grow its ad revenues the same way that Google did! – by involving small players to pay small sums by offering them superior services.

 

That is one place where conventional advertising agencies have failed – they have  failed to tap in on clients that may have small budgets for advertising but in terms of volumes, they are a large chunk of any economic market. Thus (side tracking a bit) – conventional advertising service agencies in the future are going to have to figure out ways to service small clients in volumes (possibly using the web and their strong brand equities). This is crucial in an economy like India which is growing and slated to have a per capita income of Rs. 20 lakh by 2020 (this economy is also probably high on the table in terms of entrepreneurship – so how to service all those mushrooming small companies with a budget for marketing themselves). I see an opportunity for conventional advertising because companies like Google and Facebook are still focusing on generating that ‘Buzz’ while ignoring the branding that backs the buzz – that’s where conventional agencies can capitalize on their expertise. Scale still would remain an issue they would need to sort out.

6 Responses to “New Developments at Facebook – A Change in the Social Media Marketing Scenario”

  1. anand
    November 29, 2007 at 2:21 pm #

    1300 figure is based on the data captured from the registration form which the user fills during the registration. This to a large extend is not true and the figure can be skewed on either side. Is there a quantifiable way to calculate ROI for online marketing campaigns?

    FYI – A full page in Times would not cost less than 35 lacs and 14lacs in DNA ;)

  2. November 29, 2007 at 5:35 pm #

    According to facebook, the 1300 figure is not solely on data capture – its on the basis of social conversations (which is why it is supposedly 1 step ahead of the AdWords/ AdSense combo). So they are thus labeled as social ads. The placement does not ONLY revolve around the data capture as far as i know.

    Again im not a media planner and i do not know the intricacies of calculating ROI. On a very basic level, the ROI is calculated for media just as any return is calculated – by examining the risk(expenditure)/ return ratio. In the case of online advertising, because one pays per click or per 1000 clicks, there is lower ‘waste’ as they say in media planning – you hit people only who are interested.

    You also get all the analysis from the advertiser (which again is precise) so it becomes easy to calculate what your return is.

    Again ROI is subjective – it depends on the advertiser. If an advertiser feels that he only needs to generate hits to his website because he is using the net as a branding tool, then his ROI may be significantly different from the ROI of an advertiser whose sole aim is to promote sales and thus his ROI depends solely on sales (the other advertiser’s ROI may include factors such as time spent on website etc).

    Thanks for the figures :)
    Hope you’re enjoying WATBlog

  3. Neha
    December 3, 2007 at 6:55 am #

    Can anyone tell me if there are any specialised Recrutiment advetising agencies in India ?

  4. Shauvik Kumar
    December 18, 2007 at 3:16 pm #

    Hi…

    I wonder why so many outgoing links are wrongly mapped in this site. For Instance you can see the “why microsoft” in the first paragraph, I have come across many such instances in this site. The Webmaster please take a loof of it.

    Thanks

  5. December 19, 2007 at 6:37 pm #

    hey sorry about that i think i was just getting used to WordPress at the time.

    Its all solved. Hope u enjoyed the post – apart from that glitch.

  6. February 27, 2008 at 11:53 am #

    Neha – sorry i dont have the answer to your question – could you be a little more specific – can anyone helpneha please shes looking for specialized recruitment ad agencies in india

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