Facebook to Challenge TV for Branding Budgets

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Facebook, the undisputed king of social media marketing may pull in as much as $4 billion in revenue this year. And some analysts,  referring to a “leaked document belonging to investor Goldman Sachs” believe the company’s profit was $500 million on $2 billion in revenue last year. Given the astronomical valuation of $75 billion currently being discussed for the company, Robert Hof recently wrote an article explaining how the company's vision differs from what has come before and how it  will continue to attract a higher percentage of ad budgets.

The statistics are impressive.  One-eighth of the time people spend online occurs at Facebook. Each Facebook user is connected to 130 friends and spends 6.5 hours a month on the site.  Yet the annual revenue per monthly unique U.S. visitor at Facebook is currently $12.10. By comparison, Yahoo pulls in $34.90 and Google generates $163.60 annually from each unique monthly visitor.

To date, social media advertising has been vastly different from search and display.  Facebook is set to create ‘an entirely new way to advertise’. Its form of social media is all about brand messaging. It’s traditional word of mouth marketing on steroids.

Hof remarks that marketers can appreciate the wide exposure they received from a successful Like campaign but there's more to it than that. Facebook’s COO Sheryl Sandberg says that Facebook’s emphasis is on the top half of the marketing funnel. "We're demand generation, before you know you want something."

In other words, Facebook plans to excel where TV has long reigned. But before it gets there, marketers will have to learn how to yield control of their branding messages and let the consumer inputs do that part for them.  There’s also the question of just how far consumers will go when it comes to giving up information that has long been considered too private or personal to share with the rest of the world.

If Facebook succeeds in changing business and personal culture, then the $75 billion valuation for the company may not be farfetched at all. And this situation could keep TV executives up late trying to find new competitive strategies.

[Source: Hof, Robert. You are the Ad. TechnologyReview​.com. MIT. May/June 2011. Web. 29 Apr. 2011]
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.