FACEBOOK DOMINATES DISPLAY ADS & INNOVATES PRODUCT TO REFLECT 2nd INTERNET ETHOS
The Unilever campaign is an example of brands increasing experimentation with and utilization of social media. This migration to social media platforms is reflected in Facebook’s sizable market share gains in display advertising impressions, with comScore reporting that in Q1 2011, Facebook served over 346 billion ad impressions or more than 31% of all U.S. display ads, a figure nearly double the company’s impressions served in Q1 2010 when it accounted for just over 16% of the U.S. display market impressions. Looking at the top ten, Facebook served 20%+ more ads than the other nine leading sites combined!
As Carolyn Everson, who recently left her post as Microsoft’s head of global ad sales to run sales for Facebook, notes, “Everyone is really eager to partner with Facebook, and I see tremendous interest in Facebook, more interest than in any other company I’ve worked for ─ and that’s why I joined. The companies are asking for help in how to bring their brands to life.”
Figure 1: Facebook Display Advertising Share Increasing as Company Increases Share of Eyeballs
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We believe advertisers will continue to increase their spend on Facebook as the platform becomes increasingly ubiquitous, as brands become increasingly comfortable with social media, and as Facebook continues to improve the tools available to advertisers.
Facebook’s advertising is still in the embryonic stages and the company is innovating to enhance the experience for advertisers. Last week we discussed their rollout of Facebook-Studio, a stand-alone community site that allows advertisers to share the work they’re producing on Facebook and gain inspiration from viewing successful examples from their peers.
This week, Facebook released enhancements to its advertising analytics tool with an increased focus on social metrics, incorporating new columns like “Social Reach”, defined as the absolute number of people who saw an ad with social context (names or pictures of friends who connected with the ad’s destination), and “Connections”, defined as social actions triggered by an ad, including Page Likes, application installs, and Event RSVPs.
Figure 2: Facebook’s New Advertising Analytics Tool Emphasizes Second Internet Metrics
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Facebook sits in the center of the Second Internet and we are encouraged that the company is evolving its advertising product to reflect the unique attributes that define this ecosystem. We believe that this strategy not only clarifies the core value to advertisers, it also encourages the creation of advertising campaigns that can enhance, rather than diminish, the user experience.
Figure 3: Second Internet Attributes
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Source: Wedbush Securities, Inc.
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Their efforts appear to be paying off as users are increasingly interacting with brands on Facebook. In a proprietary survey we conducted in April with 2,500 Internet users, 59% of Facebook users stated that they had “Liked” a company/brand, up from 51% when we polled in November 2010 and 47% when we polled initially in September 2010. Interestingly, the increased interaction was spread across all age demographics, with users over 55 showing the greatest increase (up 19% since our first poll in September).
Figure 4: Our Survey Finds Facebook Users Are Increasingly “Liking” Brands
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Source: Wedbush Securities, Inc.
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In addition to Facebook getting better, advertisers must also improve at leveraging the platform to its fullest. Search Engine Optimization (SEO) company BrightEdge found that less than one-third of the top 200 brands in the Fortune 500 had Facebook pages that appeared in the first 20 Google results for the brand’s name.
Figure 5: Brands Are Still Learning How To Optimize Facebook Pages
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In addition to SEO for Facebook pages, in our Second Internet report, Matt Monahan, Director of the social advertising technology company, EpicSocial, suggested that savvy advertisers should increasingly prioritize News Feed Optimization (NFO).
As Monahan explained, Facebook has an algorithm called EdgeRank that surfaces the most relevant content to the top of the newsfeed. The exact details of the EdgeRank algorithm are known by few, but the two major drivers of relevance between brands and fans on Facebook are the number of fans a brand has relative to other brands in its category and the post quality score of the brand’s content published through their fan page. On Facebook, post quality score is a 7-day rolling average of likes, comments, and shares of content distributed through the fan page to fans. It’s important that brands maintain leadership in their category in terms of fan number and post quality. The newsfeed is a powerful communication tool capable of creating earned media value, cost avoidance and driving sales for brand marketers.
In other news, EpicSocial, along with Sharethrough, SocialVibe, and SuperSonicAds, have been announced as initial test partners for a new Facebook program that enables brands to reward users with Facebook Credits for watching sponsored videos. Now, brands can buy and distribute Credits to their target audience in exchange for their time, attention, and feedback. Users can spend Facebook Credits on virtual goods within Facebook games like Farmville and on Facebook Deals.
Says Monahan, “The Facebook Credits program improves the value proposition of the platform and will be a driving force behind brand dollars currently being spent on TV shifting to Facebook. We expect increased attention to this offering as a result of the predictability, target-ability, and ultimately, the ease through which social audiences can be delivered to branded video content through the Facebook Credits program.”
Figure 15: New Facebook Program Allows Brands To Buy & Distribute Credits to Target Audience To Incentivize Interaction
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