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FACEBOOKTHE GROWTH OF AN
ADVERTISING GIANT
SO, YOU’RE
A MARKETER…
Works at HubSpot
About
You know
Facebook, right?
We thought so too. Until
we realised just how much
we DIDN’T KNOW about
their advertising strategies
over the last few years.
I mean, did you know
that the first way to advertise
on Facebook was through
‘Flyers’ and they have
a ‘Marketplace’
where you can buy
and sell your stuff?
WE DIDN’T!
So we decided to share their story
with you because as marketers
we need to closely watch the
trends in advertising, and with
Facebook being such a big player,
we can’t afford to miss a trick!
SO LET’S
START
AT THE
BEGINNING
RecentRecent
2013
2012
2011
2010
2004
2005
2006
2009
2008
2007
Founded
Mark Zuckerberg launches
‘Thefacebook’ at Harvard
University. It quickly starts
to spread like wild fire.
Imagesource:Mashable
Itlookslikethis
The majority of revenue
comes from ‘Flyers’ which
are mostly purchased by
students or small local
businesses for $10-$40 per
day who want to target an ad
to a specific college campus.
Source: Quora.com
Flyers are advertisements
displayed along the side
of the Facebook homepage
and are controlled by
Facebook.
They are mostly used by
Facebook members to
advertise parties or other
social events on campus.
Theylooklikethis
Image source: College Web Editor
Andmakeup
mostofFacebook’s
revenue for
thatyear
Image source: College Web Editor
Theylooklikethis
Facebooklaterchangesitto
anauction-basedCPCmodel,
calledFlyers Pro.
Advertiserscansetamaxprice
forwhatthey’rewillingtospend
andcantargetbasedongender,
age,location,politicalviews,
relationshipstatus,education
status,andworkplace.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
1,000,000,000
500,000,000
100,000,000
50,000,000
10,000,000
1,000,000
100,000
10,000,000,000
Usercount
Revenue
👤400,000
$382,000
RecentRecent
2013
2012
2011
2010
2004
2005
2006
2009
2008
2007
Founded
Itlookslike
thisnow
THEFACEBOOK
CHANGES
ITS NAME TO
FACEBOOK
Theyhaveonefulltimead
salesman,KevinColleran.
Hisfirstbigaddealcomes
fromPartyPoker.
TheybuyadsonaCPA
(Costperacquisition)basis,
aflatfeeof$300foreach
newsubscriberwhosigns
upandputsatleast$50
intoagamblingaccount.
Source: The Facebook Effect
ItisaHUGEdealfor
Facebook’srevenueand
bringsin$60,000each
monthjustforthe200
membersonaverage
whosignup!
Source: The Facebook Effect
Itswiftlycomestoanend
though,whenayearorso
latergamblingisoutlawed
intheUnitedStates,and
FacebookdropsPartyPoker.
SURPRISINGLY, SOME
MAJOR COMPANIES
ARE ALREADY JOINING
IN THE FACEBOOK
ADVERTISING PARTY.
Appleisoneofthebiggest
revenuegeneratingadvertisers
in2005forFacebook.
TheysponsoranApple‘Group’,
whichpaysFacebook$1per
month,permember.AstheApple
groupgrows,Facebookbegins
tomakehundredsofthousands
ofdollarspermonth.
Anotherbigplayerinthe
sponsoredgroupgame
isVictoria’sSecret.
Facebookrequiresthemto
makeaminimummonthly
paymentof$25,000.
Source: The Facebook Effect
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
1,000,000,000
500,000,000
100,000,000
50,000,000
10,000,000
1,000,000
100,000
10,000,000,000
Usercount
Revenue
👤5 million
$9 million
RecentRecent
2013
2012
2011
2010
2004
2005
2006
2009
2008
2007
Founded
Imagesource:Mashable
Itlookslike
thisnow
Facebookallows
everyoneover
thirteen years
old tobecome
amember.
Theoffersfor
partnershipsandbuy
outsstarttofloodin.
MICROSOFT
GETS LUCKY!
Andbecomesthe
exclusive provider
ofbanneradsand
sponsoredlinks
onthesite.
Source: Microsoft.com
COMPANIES
THAT TRY
TO BUY
FACEBOOK
Viacom
$1.5billion
Yahoo
1billion
MySpace
Microsoft
$15billion
NewsCorp
Unnamed
NewYork
Financier
$10million
NBC
Friendster
Google
(twice)
COMPANIES
THAT TRY
TO BUY
FACEBOOK
Viacom
$1.5billion
Yahoo
1billion
MySpace
Microsoft
$15billion
1.6%stakesold
NewsCorp
Unnamed
NewYork
Financier
$10million
NBC
Friendster
Google
(twice)
Declined
Declined
Declined
Declined
Declined
Declined
Declined
Declined
Declined
ZUCKERBERG
HOLDS FIRM.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
1,000,000,000
500,000,000
100,000,000
50,000,000
10,000,000
1,000,000
100,000
10,000,000,000
Usercount
Revenue
👤12 million
$48 million
RecentRecent
2013
2012
2011
2010
2004
2005
2006
2009
2008
2007
Founded
Itlookslike
thisnow
FACEBOOK
LAUNCHES
MARKETPLACE,
AN APP FOR
CLASSIFIED
LISTINGS.
Itisusedtolistwhatyou
haveandwhatyouwant
withinyournetworks.
Randomfact:
Thisideawascatalyzedby
amock-upbuiltentirelyin
ExcelbyJoshPritchard.
WAIT,
WHAT?
FacebookhadaBuy
andSellMarketplace?
Isitstillgoing?
YUP!
InMarch2009,Facebook
approachesOodle,anonline
classifiedadsservicecompany
totakeovertheMarketplace.
Source: Facebook
Theybuildanentirely new
marketplace focusedon
givingpeopleaplacetobuy,
sell,orgivethingsawayto
thepeopletheyknow.
Itstillcontinuestoday
andlookslikethis
FACEBOOK
LAUNCHES
THE MOBILE
VERSION OF
ITS WEBSITE
Facebook’smobilewebsite
letsuserssurfFacebookon
awebsiteoptimised for
small screens.Theycan
uploadphotosandnotes,send
andreceivemessages,wall
posts,andpokesusingSMS.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
1,000,000,000
500,000,000
100,000,000
50,000,000
10,000,000
1,000,000
100,000
10,000,000,000
Usercount
Revenue
👤50 million
$153 million
RecentRecent
2013
2012
2011
2010
2004
2005
2006
2009
2008
2007
Founded
Whiletherestoftheworldfalls
intoarecession,Zuckerberg
steps up theadvertisinggame
atFacebook.
Anycommercialentitycan
nowcreatea‘Page’forfree
Theintentionisthatthose
Pageownerswillfind
waystospend money
throughadvertisingtheir
FacebookPage.
Facebookinvests
moreintheirmobile
strategyandnow
allowsmembersto
commentonFriends’
statusupdates.
Theserviceissopopular
thatnearlya million
mobilecommentsare
postedinthefirst24hours
aftertheupdate’srelease.
Source: Mashable
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
1,000,000,000
500,000,000
100,000,000
50,000,000
10,000,000
1,000,000
100,000
10,000,000,000
Usercount
Revenue
👤150 million
$272 million
RecentRecent
2013
2012
2011
2010
2004
2005
2006
2009
2008
2007
Founded
FACEBOOK
BEGINS TO
REALISE THEIR
POTENTIAL
FOR ONLINE AD
DOMINATION.
Andstarttoprovide
moreadvanced ad
targeting options
totheiradvertisers.
Theyintroduce
language and
geographical
based ad targeting
toenticemore
advertisers
Pageowners
canset up and
manage theirown
adsforthefirsttime.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
1,000,000,000
500,000,000
100,000,000
50,000,000
10,000,000
1,000,000
100,000
10,000,000,000
Usercount
Revenue
Mobileuser
👤350 million
$777 million
65 million
RecentRecent
2013
2012
2011
2010
2004
2005
2006
2009
2008
2007
Founded
FACEBOOK
RELEASES THE
FIRST MOBILE
APP FOR
FACEBOOK
Andintroduces
the‘Like’ button
forexternalsites
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
1,000,000,000
500,000,000
100,000,000
50,000,000
10,000,000
1,000,000
100,000
10,000,000,000
Usercount
Revenue
Mobileuser
👤600 million
$1.8 billion
100 million
RecentRecent
2013
2012
2011
2010
2004
2005
2006
2009
2008
2007
Founded
FACEBOOK
INTRODUCES
SPONSORED
STORIES FOR
DESKTOP
Userswho ‘Like’ Ben&Jerry’s
willseeupdateslikethisonein
theirNewsFeed.
Imagesource:TheNextWeb
Advertisers
canchoose
tohighlight
particularuser
actionssothatwe
seetheiractivity
inournewsfeed.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
1,000,000,000
500,000,000
100,000,000
50,000,000
10,000,000
1,000,000
100,000
10,000,000,000
Usercount
Revenue
Mobileuser
👤845 million
$3.71 billion
350 million
RecentRecent
2013
2012
2011
2010
2004
2005
2006
2009
2008
2007
Founded
INTRODUCES
MOBILE ADS
FOR THE FIRST
TIME
Theyappear
withinourNews
Feed soasnot
tointerruptour
Facebookuser
experience.
FACEBOOK
INTRODUCES
THE SOCIAL
GRAPH
Whenauserfriendsanotheruser,
Likesapage,commentsonaphoto,
listenstomusic,orplaysagame,
a connection is written to
the Social Graph,whichisthen
providedasdataforadvertisers.
Allofthesestoriesandthe
subsequentconnections
createvaluableandcompelling
marketing opportunities
forbusinessesonFacebook.
FACEBOOK INTRODUCES
THE FACEBOOK
EXCHANGE
It’sanewwayofpurchasing
Facebookadsthrough
real-time bidding.
Advertisersandagenciesare
abletousecookie-based
targetingtoreachtheiraudience
onFacebookwithmoretimely
andrelevantmessages.
Source: Facebook
FacebookExchangeadvertisers
usefirst-partyandthird-partydata
todecidewhotoserveadsto.First-
partydatareferstothecookies
thatsitesandadnetworksputon
usersbrowsers,andthirdpartydata
isinformationcollectedbyresearch
firmsanddatabrokers.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
1,000,000,000
500,000,000
100,000,000
50,000,000
10,000,000
1,000,000
100,000
10,000,000,000
Usercount
Revenue
Mobileuser
👤1.06 billion
$5.85 billion
543 million
RecentRecent
2013
2012
2011
2010
2004
2005
2006
2009
2008
2007
Founded
FACEBOOK
INTRODUCES
LOOKALIKE
AUDIENCES
Whichhelp advertisersreach
potential customers
whosharesimilar
characteristicswiththeir
currentones.
Advertisersareabletoupload
theircustomerprofiles,
referencedbyemailsorphone
numbers,andthenFacebook
targets asimilarprofileof
Facebookusersfortheadvertiser.
Thepersonalinformationof
thelookalikeisnevergivenout.
Re-targetedadsnowappear
intheNewsFeed.
TheymimicthelookofSponsored
Stories,butareaimedatusers
basedontheirbrowsing
history outsideofFacebook.
IttakesdatafromtheFacebook
Exchange Program (external
sites)andplacesadsintheNews
Feedinsteadofjusttherightside
bar. 
Advertiserscannowcreate
Unpublished Posts orDark
Posts thatintentionallydonot
appeartoallfansoftheirpage. 
Itmeansadvertiserscanpostanad
totheirFacebookPageandchoose
WHO fromtheirfanbasetoshow
itto,basedonalltheusualtargeting
criteriaASWELLasinterests.
Mobilehasclimbedsteadily
upwardasapercentageof
Facebook’stotaladrevenue.
Itgrewfrom14% to23% to
30% andnowmadethebiggest
quarteroverquarterjumpto41%.
Source: AdAge Digital
“AsofJune30th,thereare
819millionmobilemonthly
activeusersonFacebook,
up51%overtheprevious
year.”
AdAgeDigital
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
1,000,000,000
500,000,000
100,000,000
50,000,000
10,000,000
1,000,000
100,000
10,000,000,000
Usercount
Revenue
Mobileuser
👤1.15 billion
$1.18 billion
819 million
SO WHAT’S
NEXT?
Facebookhasstarted
toreleaseregional data for
thefirsttimetohelpadvertisers
understandhowpeopleuse
thenetwork.
Itisalsopartofalargerpush
togoafterdollarsearmarked
forTV commercials, thetop
choiceamongadvertiserswhen
theylaunchcampaigns.
Source: yahoo news
“Theaveragetimespent
dailywithdigitalmediais
expectedtosurpassTV
viewingforthefirsttime
thisyear,according
toeMarketer.”
AndFacebook’sad
revenueisestimatedto
reach$7.64B by 2014.
SO IT’S TIME TO
START THINKING
ABOUT YOUR
ONLINE ADVERTISING
STRATEGY, PEOPLE!
Areyoutakingfull
advantageofallof
Facebook’sadvertising
features?
WecompiledthebesttipsfromfourtopEuropean
expertsonthesubject,soyoucanbecomeaFacebook
AdvertisingMaster!
Downloadyourcopyhere
http://bit.ly/1aEtMCH

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