Big brands boost spending on Facebook

06 August 2010

PALO ALTO: Many major advertisers have substantially increased their expenditure on Facebook this year, reflecting the surge in popularity that has been enjoyed by the social network.

According to Sheryl Sandberg, the company's chief operating officer, the outlay of several key clients has expanded at least ten times over during the last 12 months, and often doubled this rate of growth. 

"Two years ago the big brands were experimenting with us. They started buying with us a year ago. Now, they're going big," she said.

"A movie studio last year that did three movies with us; this year, if they're releasing 12 movies, they'll do ten of them with us. A company that did one product launch with us; this year, they're going to do half of their product launches."

The cost of purchasing inventory has remained largely static, despite the fact Facebook's audience stands at more than 500m netizens, Sandberg added.

Prices may rise as the site enhances its "value" to marketers, having leapfrogged Yahoo in terms of the number of display ads served the US, leading the sector on a share of 16% in Q1 2010, according to comScore.

Facebook also estimates that around 50% of its members log in every day, and Michael Gartenberg, a partner at the Altimeter Group, the consultancy, argued this was its core strength.

"Facebook's value is being able to preserve that user base," he said. "Advertisers not only want to make sure that those people aren't churning and that they're actually using their accounts, but that there's growth here as well."

Coca-Cola, the soft drinks giant, has proven keen to leverage the opportunities provided by the social network to connect with customers, both through paid-for and free activities.

"You can't ignore the reach that's there, but it's also the true engagement that we have," Michael Donnelly, Coca-Cola's director of global interactive marketing, said.

Adidas and JPMorgan Chase have similarly utilised the variety of tools offered by the Web 2.0 service, which has rolled out an extremely broad range of options for commercial purposes.

"Some clients have actually been pretty active on Facebook for a while, but we're finding a number of clients that are starting to dig in a little bit more," Joe Mele, a managing director at Razorfish, said. "We're seeing increased interest."

One way Facebook is seeking to build on this momentum is via acquisitions, with virtual currencies, mobile developers and advertising among its main areas of focus. 

"As we get bigger and our platform gets more stable, I fully expect that we will be doing more significant acquisitions," said Vaughan Smith, director of corporate development. 

"We're doing advertising, especially brand advertising, in a different way than has been done before."

Data sourced from Business Week; additional content by Warc staff