Facebook spies growth

03 February 2012

PALO ALTO: Facebook, the social network, currently derives a value of less than $5 from each of its users a year, and is seeking to develop new services for advertisers, and its own brand, to drive growth.

In a filing for its initial public offering, Facebook reported it had 845m monthly active users, including 483m logging on every day. This audience generates 2.7bn "likes" and comments in a 24 hour period.

The company's revenues stood at $3.7bn in 2011, equating to a value of $4.39 per user on an annual basis. The overall a total was up from $1.97bn in 2010 and $77m in 2009.

Advertising sales delivered 85% of Facebook's revenues in 2011, although this figure had in fact declined from a share of 95% posted in 2010 and the 98% recorded in 2009.

"The loss of advertisers, or reduction in spending by advertisers with Facebook, could seriously harm our business," it said. "We intend to invest in additional products for our advertisers and marketers while continuing to balance our monetisation objectives with our commitment to optimising the user experience."

Among the successful case studies referenced by Facebook was the "Mean Stinks" campaign for Procter & Gamble's Secret deodorant, targeted at female shoppers, which helped boost sales by 9% in 26 weeks.

Nike's "Write the Future" video was also seen by 140m people in 20 countries and secured 7m engagements, such as watching the video, and "liking" or commenting on it.

Turning to display, Walmart purchased ads aimed at 18-49 year olds around the Black Friday period in 2011, offering a "shopping map" to help consumers find cheap products in stores, and reaching 60m people overall.

Diageo, the spirits group, reached 50m shoppers aged 21 years old and above in America with a campaign for Captain Morgan, Smirnoff and other brands, yielding a 20% increase in offline sales.

Looking to mobile, some 425m individuals visit Facebook per month via a mobile phone, and this channel could be a highly profitable one going forward.

It said: "We currently do not show ads or directly generate any meaningful revenue from users accessing Facebook through our mobile products, but we believe that we may have potential future monetization opportunities such as the inclusion of sponsored stories in users' mobile News Feeds."

In the filing, Facebook also cited the importance of building its own brand. The firm invested $427m in sales and marketing in 2011, and spent $388m on R&D, two crucial tools in this area.

"We believe that the Facebook brand has significantly contributed to the success of our business," the company said. "Maintaining and enhancing our brand will depend largely on our ability to continue to provide useful, reliable, trustworthy, and innovative products, which we may not do successfully."

Data sourced from Reuters/Facebook; additional content by Warc staff