Brand advertising on social networks
…is going to be huge. It probably already is getting huge, and they’re just not talking about it because when the money is starting to flow your way, why let everyone else know?
If there’s one thing that drives me crazy right now, it’s the repeated meme (it’s been going for at least a year) that there’s no money in advertising on social networks, that CPMs are abysmal, that Facebook has no way to make any revenue, etc. etc.
Here’s just one way that Facebook is going to make a pile of money: I guarantee you that right now, Mark Zuckerberg and Sheryl Sandberg are taking phone calls from top brand advertising agencies representing Nike, Kellogg’s, major record labels, you name it, asking “how do I get my client’s brand plastered all over Facebook”?
In fact, I’m pretty confident this was going on at least a year ago, based on what I learned during a brief dive into the social network space early last year.
And if the stats I’m reading are right, less than 5% of worldwide brand advertising is happening online right now (versus significantly higher rates for other types of advertising, of which Google is eating the lion’s share). A genuine avalanche of money that currently goes into television, magazines, billboards, etc. is looking for a way to go online.
The low CPM debate is just plain stupid - it’s a simple math problem: when you have 80 billion page views per month to fill, naturally some of the remnants are going to go at bargain rates. The question nobody seems to be asking is: what is Facebook getting from their premium ad buyers?
I’m pretty sure the answer is that Facebook can name their price. For certain demographics, getting your brand in front of your audience on Facebook would be like advertising during every prime time CBS, NBC, ABC, FOX, etc. show simultaneously. Probably better since there’s no DVRs for the web yet. It’s like a Superbowl ad every day.
One reason the avalanche of brand advertising hasn’t been unleashed yet is that Facebook is genuinely cautious about alienating their audience with too much of it. If you look carefully, the most advanced experiments in brand advertising on Facebook are happening within the top applications on the Facebook Platform. Within Flixster and Slide and RockYou and so on, video ad placements, full screen overlays, and various other experimental formats are being tried with Facebook’s implicit blessing.
The other reason is that the brand ad folks and agencies appear to be kinda old school. I spoke to one senior executive familiar with the industry last year who laughed off the idea of brand advertising moving online in any significant way anytime soon. His opinion was informed by recent interviews with the heads of some major New York agencies. So it may take a while for some of those folks to come around.
But when you start seeing subtle mentions of Coke and Nike and Verizon and Adidas in various corners of Facebook, you’ll know that those multi-billion dollar ad budgets have finally started going online.
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