A Complete History of Facebook Ads...So Far

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A comprehensive history of Facebook's changes that impact the way their ad platform works for brand marketers of all sizes.

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A Complete History of Facebook Ads...So Far

  1. 1. Looking Back: The History of Facebook Ads
  2. 2. © 2014 Simply Measured, Inc February 2004 Facebook Launches as Harvard-Only Social Network Thefacebook.com 2 Eduardo Saverin Andrew McCollum Chris Hughes Mark Zuckerberg Dustin Moskovitz
  3. 3. © 2014 Simply Measured, Inc It looks like this. 3
  4. 4. © 2014 Simply Measured, Inc March 2004 4 Just a month later, Facebook expands to Boston University, MIT, Boston College, Dartmouth College, Northeastern University, Stanford University, Columbia University, and Yale University.
  5. 5. © 2014 Simply Measured, Inc New Networks, More People 2004-2006 December 30, 2004 Facebook Reaches 1 Million Users Early 2005 Facebook Adds International School Networks September 2005 Facebook Adds High School Networks May 2006 Facebook Adds Work Networks September 26, 2006 Facebook Opens To Anyone 13 Years Or Older With An Email Address 5
  6. 6. © 2014 Simply Measured, Inc $$$$$ First Dollars $$$$$ In 2004, revenue begins to flow in from Flyers purchased by students / local businesses for $10-$40 per day. Displayed on Facebook Homepage Targeted at specific college campuses + events Controlled by Facebook Makes up most of Facebook’s 2004 revenue 6
  7. 7. © 2014 Simply Measured, Inc7
  8. 8. © 2014 Simply Measured, Inc Facebook looks like this now. 8
  9. 9. © 2014 Simply Measured, Inc Adding Features October 2005 – Users can upload photos! Facebook’s interactive visual nature and voyeuristic capability send it soaring, and are responsible for most time spent on the social network. 9
  10. 10. © 2014 Simply Measured, Inc The Age of Experimentation: Party Poker 10  Facebook’s first major ad deal  Party Poker buys ads based on acquisition, paying $300 for each new subscriber who signs up and puts at least $50 into gambling account  Brings in around $60,000 each month in ad revenue  Ends in 2006 when online gambling is ruled illegal in the US
  11. 11. © 2014 Simply Measured, Inc The Age of Experimentation: Apple 11 Apple sponsors an Apple Group, paying Facebook $1 per member, per month. As the group grows, Facebook begins to make hundreds of thousands of dollars from Apple per month.
  12. 12. © 2014 Simply Measured, Inc End-of-2005 Stats USERS: 5 MILLION REVENUE: $9 MILLION 12
  13. 13. © 2014 Simply Measured, Inc13
  14. 14. © 2014 Simply Measured, Inc Facebook looks like this. 14
  15. 15. © 2014 Simply Measured, Inc August 2006: Three Big Changes #1 – Open the gates. Facebook Development Platform launches, enabling developers to create outside apps that work with Facebook. What this means for brands: Developers now have the ability to bring Facebook friend relationships, photos, events, and profile info to web and desktop apps. This provides brands with a rich well of data and opportunity for growth, and also solidifies Facebook’s commitment to its open source developer community. What this means for the average user: The Facebook experience gets extended into other areas it previously did not touch. 15
  16. 16. © 2014 Simply Measured, Inc August 2006: Three Big Changes #2 – Demonstrate the possibilities. Facebook (America’s second-largest social network to MySpace at this point) announces a one-year marketing partnership with J.P. Morgan Chase to promote the Chase credit card. Banner ads invite users to join a special Chase network wherein they receive reward points for actions like paying bills on time. Points can be converted for charity donations or redeemed for prizes. What this means for brands: A bold expansion of new advertising possibilities on Facebook. What this means for the average user: A more visible advertising presence enters user experience on the network. 16
  17. 17. © 2014 Simply Measured, Inc August 2006: Three Big Changes #3 - Partner up. Facebook and Microsoft form a “strategic alliance,” using Microsoft’s advertising technology and Facebook’s social network to bring “relevant advertising” to Facebook users. Microsoft’s adCenter becomes exclusive provider of banner ads and sponsored links. What this means for brands: Instead of investing in their own advertising technology, Facebook uses Microsoft’s expertise to step up its ad game. Brands must obtain all banner ads and sponsored links from Microsoft. What this means for the average user: The partnership aims to better connect relevant users and advertisers thanks to graphical ad placements, automated content-targeted ads, and the ability to aggregate user behavior anonymously. It’s the genesis of thoughtful, data-centric, targeted advertising on Facebook. 17
  18. 18. © 2014 Simply Measured, Inc September 2006: The News Feed is Born 18
  19. 19. © 2014 Simply Measured, Inc A Share Thing November 2006 Features Added: • Copy and paste links to photos, videos, or any other content directly to Facebook. • Click FFF on any site to automatically share the link on Facebook. What it means: Instead of emailing your friend an article or tentative purchase, Facebook wants you to share that content using their site. This generates more user activity and is a great opportunity for advertisers to get more user data and get their content seen by more and more people. The beginning of organic reach? 19
  20. 20. © 2014 Simply Measured, Inc End-of-2006 Stats USERS: 12 MILLION REVENUE: $48 MILLION 20
  21. 21. © 2014 Simply Measured, Inc21
  22. 22. © 2014 Simply Measured, Inc This is what Facebook looks like. 22
  23. 23. © 2014 Simply Measured, Inc Facebook launches its mobile site. 23 • Optimizes Facebook for small screens • Allows users to upload photos and notes, send and receive pokes and Messages, and craft wall posts.
  24. 24. © 2014 Simply Measured, Inc 2007: The Year of Major Advertising Developments February Virtual gift shop launches. May Marketplace app for classified listings launches. Facebook platform launches with about 85 applications. August In response to Vodafone and other British companies pulling ads from Facebook after appearing alongside the ultra-conservative British National Party group, Facebook offers an opt-out feature that lets advertisers prevent their ads from showing up. September Facebook Flyers changes to performance-based auction model model called Flyers Pro. Advertisers set a max price for what they’re willing to spend and targeting features—like gender, age, location, and political views—are added. November The big debut of: • Facebook Ads • Brand and business Pages • Facebook Insights • Beacon (an ill-fated ad system that encouraged the viral spread of brand messages) 24
  25. 25. © 2014 Simply Measured, Inc End-of-2007 Stats USERS: 50 MILLION REVENUE: $153 MILLION 25
  26. 26. © 2014 Simply Measured, Inc26
  27. 27. © 2014 Simply Measured, Inc Any brand can now create a Page for free. As brands advertise their Facebook Pages, they spend money. 27
  28. 28. © 2014 Simply Measured, Inc Facebook allows members to comment on Friends’ status updates. The feature is so popular that nearly 1 million mobile comments are posted in the first 24 hours. 28
  29. 29. © 2014 Simply Measured, Inc Facebook focuses on raising engagement and improving mobile.  Facebook Chat launches. 29
  30. 30. © 2014 Simply Measured, Inc Engagement Ads  Facebook introduces Engagement Ads. Rather than clicking on an ad and being directed to another site, these ads keep members within the contained walls of Facebook and their social community. It’s also part of Facebook’s effort to combat the dismal click-through rates of “traditional” ad formats. There are three different manifestations of Engagement Ads:  Comments: Members can now leave comments on ads just like wall posts. Ads can show up to four comments per object, and the activity spreads to the users’ News Feed. Good for : entertainment brands, auto brands, apparel brands, new product rollouts.  Virtual Gifts : Brands can now create virtual items for users to share with one another. Good for : consumer products, entertainment and media brands.  Fans : Users can now become fans of products they like, triggering a notification to their network which then ties into social ads. Good for : established brands and luxury brands. 30
  31. 31. © 2014 Simply Measured, Inc Facebook Connect Facebook Connect becomes available. This “next iteration of Facebook Platform” allows users to connect their Facebook identity, friends, and privacy to any site, enabling third-party sites (brands) to implement Facebook Platform features off Facebook. 31
  32. 32. © 2014 Simply Measured, Inc End-of-2008 Stats USERS: 150 MILLION REVENUE: $272 MILLION 32
  33. 33. © 2014 Simply Measured, Inc33
  34. 34. © 2014 Simply Measured, Inc February 2009: Facebook adds the Like Button. 34
  35. 35. © 2014 Simply Measured, Inc Facebook begins to provide brands with advanced ad targeting options. March Facebook introduces language and radius-based ad targeting. July Facebook launches connections targeting, multiple- country targeting and birthday targeting. September Facebook begins testing Ads API. 35
  36. 36. © 2014 Simply Measured, Inc Facebook launches self-serve Ads for Pages and Events. In an effort to draw in more advertisers, Facebook puts Page set-up and management in the hands of Page owners for the first time. 36
  37. 37. © 2014 Simply Measured, Inc The Light Goes Out On Beacon Facebook shuts down “Beacon” over privacy concerns. The program got in hot water because it posted updates to Facebook profiles when their owners interacted with partner sites. 37
  38. 38. © 2014 Simply Measured, Inc Third-Party Solutions & The Birth of Social Media Measurement Nielsen launches Brand Lift with Facebook at Advertising Week, a product which measures the effectiveness of ads by polling users. This signals the growing interest in social media measurement and the ever-present question: “But is it working?” Third-party solutions are developed to enable and manage advertising on Facebook, budgets start shifting to these solutions, and the need for data, metrics, and reporting increases as paid activity does. 38
  39. 39. © 2014 Simply Measured, Inc End-of-2009 Stats USERS: 350 MILLION MOBILE USERS: 65 MILLION REVENUE: $777 MILLION 39
  40. 40. © 2014 Simply Measured, Inc40
  41. 41. © 2014 Simply Measured, Inc Facebook rolls out the first mobile app for Facebook. 41
  42. 42. © 2014 Simply Measured, Inc 2010: New Year, New Features August Facebook launches Places. September Facebook expands its data offerings to advertisers by adding social context metrics to its performance analytics. November Facebook rolls out beta version of Check-In Deals using Facebook Places. 42
  43. 43. © 2014 Simply Measured, Inc USERS: 600 MILLION MOBILE USERS: 100 MILLION REVENUE: $1.8 BILLION 43
  44. 44. © 2014 Simply Measured, Inc44
  45. 45. © 2014 Simply Measured, Inc Sponsored Stories In February 2011, Facebook launches Sponsored Stories. In this ad model, brands pay for user actions—like checking into a location or completing a level in a Facebook app game—to be displayed in the column to the right of the News Feed. 45
  46. 46. © 2014 Simply Measured, Inc Facebook Studio In April 2011, Facebook unveils Facebook Studio to “showcase some of the world’s most successful social marketing”—and to reel in new advertising business. 46
  47. 47. © 2014 Simply Measured, Inc The News Feed Gets A Makeover Between September and November 2011, Facebook enacts a number of changes to make the News Feed (and the ads on it) easier to sort and view. Top Stories are created to ensure users “won’t have to worry about missing important stuff,” putting the most “interesting” (interacted with and/or relevant to your browsing history) content closer to the top of Feeds. Ticker feature shows users what their friends are posting in real-time. “Like” Update shows users which brands they Like in their News Feeds. 47
  48. 48. © 2014 Simply Measured, Inc End-of-2011 Stats USERS: 845 MILLION MOBILE USERS: 350 MILLION REVENUE: $3.71 BILLION 48
  49. 49. © 2014 Simply Measured, Inc49
  50. 50. © 2014 Simply Measured, Inc Buying Instagram In April 2012, Facebook buys Instagram for about $1 billion in cash and stock, vowing the two will remain separate but experience “increasing ties to each other.” 50
  51. 51. © 2014 Simply Measured, Inc Going Public! On May 18, 2012, Facebook goes public. Theirs is the biggest IPO in internet history, with a peak market capitalization of over $104 billion. Below-predicted performance, NASDAQ roadblocks, and legal troubles plague the debut. 51
  52. 52. © 2014 Simply Measured, Inc Monetizing Mobile & Promoting Posts Going public marks the beginning of greater efforts to make Facebook’s ad structure more lucrative. In the following months, there are many ch-ch-changes: June 2012 Facebook rolls out first mobile-only ad product, allowing advertisers to purchase Sponsored Stories solely on mobile devices. The ads appear within the News Feed. August 2012 Facebook releases Sponsored Results, its first search ad units. September 2012 • Facebook begins testing placing mobile ads in third-party applications. • Facebook launches Facebook Gifts (after acquiring gift-giving app Karma). October 2012 To stymy News Feed clutter (and make some $$$$), Facebook introduces Promoted Posts, allowing users to pay to ensure their posts get seen by friends. December 2012 Facebook announces it is testing a messaging option that lets users pay $1 to deliver a message to someone they’re not friends with. 52
  53. 53. © 2014 Simply Measured, Inc The Social Graph How It Works When a user friends another user, Likes a Page, comments on a photo, or plays a game, a connection is written to the Social Graph. This data goes to advertisers, forging new, valuable, socially-rooted marketing opportunities. 53
  54. 54. © 2014 Simply Measured, Inc A New Way To Purchase Facebook Ads 54
  55. 55. © 2014 Simply Measured, Inc How It Works Advertisers purchase Facebook ads through real-time bidding. Advertisers use cookie-based targeting + third-party information collected by research firms and data brokers to reach audiences on Facebook with more timely + relevant messages. 55
  56. 56. © 2014 Simply Measured, Inc USERS: 1.06 BILLION MOBILE USERS: 543 MILLION REVENUE: $5.85 BILLION 56
  57. 57. © 2014 Simply Measured, Inc57
  58. 58. © 2014 Simply Measured, Inc Facebook Graph Search Facebook continues its efforts to get the right ads and information in front of the right people—and challenge Google while they’re at it… Facebook launches Facebook Graph Search, a semantic search engine that gives answers to “natural language” queries rather than a list of links. It combines big data acquired from Facebook’s one billion users and external data into a search engine that provides user-specific search results. 58
  59. 59. © 2014 Simply Measured, Inc Lookalike Audiences Launch Lookalike Audiences help advertisers reach potential customers who share similar characteristics with current ones. How It Works  Advertisers upload their customer profiles (referenced by emails/phone numbers).  Facebook targets a similar profile of Facebook users for advertisers.  Personal information of a lookalike is never provided. 59
  60. 60. © 2014 Simply Measured, Inc Retargeted Ads Now appear in the News Feed. They look like Sponsored Stories, but are picked for users based on data from the Facebook Exchange Program (browsing history outside Facebook). 60
  61. 61. © 2014 Simply Measured, Inc Dark Posts AKA Unpublished Posts are introduced. These are posts that intentionally do not appear to all Page fans. Advertisers can choose who sees an ad they post to their Facebook Page based on usual targeting criteria + interests. 61
  62. 62. © 2014 Simply Measured, Inc Facebook Home 62 Facebook announces Android: Facebook Home. Zuckerberg refers to Facebook Home as “putting people first instead of apps.” It’s a new home screen and app launcher interface for Android that gives Facebook notifications, News Feed posts, and messages more integration with the overall phone experience. See the ad here.
  63. 63. © 2014 Simply Measured, Inc Video Ads Facebook rolls out a feature that allows advertisers to play videos in users’ New Feeds to promote movies and products on smartphones and computers. 63
  64. 64. © 2014 Simply Measured, Inc MONTHLY ACTIVE USERS: 1.23 BILLION MOBILE USERS: 945 MILLION REVENUE: $7.87 BILLION 64
  65. 65. © 2014 Simply Measured, Inc65
  66. 66. © 2014 Simply Measured, Inc Buying WhatsApp In a plan to dominate mobile and Web messaging, Facebook acquires WhatsApp for $19 billion in February 2014. 66
  67. 67. © 2014 Simply Measured, Inc Facebook Paper 67 Facebook releases Facebook Paper, a standalone mobile app radically different from the Facebook mobile app’s visual structure. It’s intended to act as a phone-based newspaper or magazine, with news and Facebook feed information all in one app.
  68. 68. © 2014 Simply Measured, Inc A New Ad Structure Throughout March 2014, Facebook rolls out a new campaign structure across its ad interfaces, including the ads create tool, Ads Manager, Power Editor, and third-party ad interfaces built by Preferred Marketing Developers. Facebook says the new structure will “make it easier for businesses to organize, optimize, and measure the performance of their ads.” 68
  69. 69. © 2014 Simply Measured, Inc Organic Reach Crisis This development coincides with Facebook’s gradual squashing of organic reach via News Feed algorithm changes in an effort to remove their previous advertising model’s in-built spending cap and get more profitable. 69
  70. 70. © 2014 Simply Measured, Inc The Latest Numbers + Mobile Madness  Digital + mobile advertising are growing, growing, growing.  Facebook reports profits of $642M during the first quarter of 2014, beating analyst expectations.  Mobile now makes up 59% of advertising revenue, up from 30% a year ago (and will only continue to grow).  In the first quarter, 1 billion of Facebook’s 1.28 billion users accessed the site through a mobile device. 70
  71. 71. © 2014 Simply Measured, Inc Conclusion If there’s one thing Facebook’s ad history shows us, it’s that the social media giant is fearless about testing new ways to monetize its platform, which has led to many great successes and a number of clear failures too (ahem, Facebook Deals, anyone?). As Facebook looks to the future, one of its greatest challenges will be balancing “making the world more open and connected” with making its ad structure pay more. Changes are happening at warp speed, and we can’t wait to see what’s ahead. 71
  72. 72. © 2014 Simply Measured, Inc Thank You! For more social media analysis + insight, follow us on Twitter @simplymeasured and check out our blog here. 72
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