Guest Post by Rob Leathern, CEO and Founder, XA.net (creator of optim.al)
Facebook has established itself as the number-one source of online user data, and is rapidly becoming one of the premiere advertising destinations on the web. Monetization, however, still lags the amount of time users spend. It is interesting to look at some specifics of how Facebook is working on closing this gap to achieve its lofty revenue goals.
Facebook really is global, with over 502 million of the 655 million total Facebook user accounts coming from non-US locations.
Many non-US locations are proving to be fruitful hunting grounds for Facebook advertisers (and thus proving profitable for Facebook), as judged by a recent examination of “suggested” bid rates for users in various countries with at least 100,000 Facebook users.
Riding the Category Train:
For any social network, the keys to creating a more compelling community and increasing monetization are getting users to engage more and to share more information with fellow network members. In this respect, Facebook is succeeding as the average Facebook user is now connected to 80 community pages, groups and events. For advertisers, more interactions mean more data which means more ways to establish relevance.
With Facebook’s self-defined category information, for the first time, we have a measurement of how much user data it considers interesting and saleable.
For its initial beta launch of broad categories, Facebook has created 8 parent categories and a total of 83 subcategories. The average Facebook user in the United States shows up in about 8 different categories, so you can look at it as 153 million users x 8.17 = 1.255 billion category-user combinations.
Facebook has a LOT more data on younger users — and if we make the simplifying assumption that older users are more valuable to advertisers, we can see that Facebook doesn’t have nearly as much targeting data on older, more valuable users.
The nature of the categories themselves is informative as well — categories based on music or movie tastes (29 of the 83 total categories) don’t monetize or predict behavior nearly as well as, say, disposable income which is not available among these data categories, of course.
The takeaway here is that Facebook will have to help convince users to share more explicit data about themselves, and better coordinate the implicit data that users leave behind in order to build a more valuable advertising environment. A good deal of this may involve coordinating and managing “likes” and making these a bigger part of the targeting world — but one way or the other, we’ll see more novel/innovative uses of data and new ad formats that will convince us to share advertisers’ messages with our friends and contacts within Facebook.