Facebook has changed advertising in 3 key ways: 1) Facebook ads allow for highly targeted advertising based on users' social media activity and interests. This precise targeting makes ads more effective. 2) Brands can engage with customers on Facebook through pages, polls, and virtual promotions. High customer engagement on Facebook pages leads to increased brand loyalty and sales. 3) The widespread adoption of social plugins like the "Like" button has integrated Facebook engagement into the majority of top websites. This has increased the volume of user data Facebook can collect and allowed them to develop new advertising products like OpenGraph.

1. How Facebook Changed Advertising
Saralyn Bass
November 2010

2. CONFIDENTIAL
Facebook: 2008
Internet mogul Barry Diller elicited laughter at a business conference
by dismissing Facebook as "a Princess phone" -- a communications
fad
Similarly, Rupert Murdoch, whose News Corp. empire includes
Facebook rival MySpace, was once quoted as calling Facebook "the
flavor of the month"
Source: TMC News 6/17/2009

3. CONFIDENTIAL
Facebook: 2010
How is Facebook performing among large brands?
Video:
http://www.youtube.com/watch?v=UwOWLEauK8k
Barry Diller:
“Facebook’s great advertising. My company, which spends a huge
amount on advertising, we spend every nickel we can on Facebook.
They’re effective. The targeting of the audience is precise enough.”

4. CONFIDENTIAL
Who Uses Facebook?
What do you use Facebook for? (photos, videos, communicating to all, communicating to one,
play games)
Who do you add as friends?
How much time do you spend on Facebook?
Do your parents use Facebook?
Do your grandparents use Facebook?
Do you pay attention to ads on Facebook?

5. CONFIDENTIAL
Facebook Growth
Valuation: Up from $6.5 billion last year to $25 billion this year
Company will generate revenue of over $1 billion in 2010 and become cash flow positive
Gavin O’Malley, Media
Post, 9/24/2010

6. CONFIDENTIAL
Facebook Snapshot
People on Facebook
More than 500 million active users
50% of active users log on to Facebook in any given
day
People spend over 700 billion minutes per month on
Facebook
Activity on Facebook
More than 30 billion pieces of content (web links,
news stories, blog posts, notes, photo albums, etc.)
shared each month
Global Reach
About 70% of Facebook users are outside the United
States
More than 70 translations available on the site
Over 300,000 users helped translate the site through
the translations application
Platform
More than 1 million websites have integrated with
Facebook Platform
Two-thirds of comScore’s U.S. Top 100 websites and half
of comScore’s Global Top 100 websites have integrated
with Facebook

7. CONFIDENTIAL
How Facebook Changed Advertising
• Fan Engagement
• Social Shopping
• ‘Like’ Button
• Facebook Connect / Open Graph
• Games / Virtual Currency
• Targeted Advertising
• Geo-Location and What This Means

8. CONFIDENTIAL
FB Pages: Fan Driven, Interactive = High Engagement
• From TV Commercial to Facebook to TV Appearance:
• In January, David Matthews, of San Antonio, launched the Facebook page
“Betty White to Host SNL (please?)!" after Ms. White appeared in a popular
Super Bowl ad for Snickers candy
• By mid-March, half million Facebookers had signed on to Matthew's petition
http://www.youtube.com/watch?v=srD7bEU9MXA

9. CONFIDENTIAL
Brand Loyalty & Engagement: 16 Million Fans
Fan Interaction
Seasonal Promotions
Charlene Li: Starbucks top in terms of web engagement

10. CONFIDENTIAL
Polls Engage Users About New Products

11. CONFIDENTIAL
Starbucks Ice Cream Promotion
• Integrated all of their touch points
• From Starbucks ice cream Facebook page you could send a coupon for a free pint
of ice cream to a friend
• .If you tried to send another pint of ice cream, given the option to download a
savings coupon for yourself
Great use of social media for product launch
Giveaways pay on Facebook
Recent pastry promotion led to 200,000 new fans in one week
Tracy Weiss, Thesidenote blog, 7/8/2009

12. CONFIDENTIAL
Lady Gaga: E-Commerce + Political Activism
5 new show
dates and how
to get tickets
Engaging fans:
“Don’t Ask Don’t
Tell” Event

13. CONFIDENTIAL
Facebook Brand Pages
• More than one-third of folks that like brand pages say they would buy the
products more often
• Brand page fans on Facebook also feel comfortable recommending the
brand to friends, with 49 percent of the respondents saying they would
"certainly" do so and 43 percent saying they "probably" would
Source: a six country study by DDB. Article: Facebook Brand Pages Pay Off, AdWeek, 10/12/2010

14. CONFIDENTIAL
Why Facebook Ads Work
http://www.youtube.com/watch?v=-wHsfeWkXvM

15. CONFIDENTIAL
Levis: Social Shopping
E-Commerce method where shopper’s friends become involved in the shopping
experience

16. CONFIDENTIAL
‘Like’ Button
• Levis has ‘Like’ buttons all over its website, making it easy to vote up what
you approve and share these recommendations with friends, plus compare
how many people have liked certain Levis’ products, side-by-side
• Within 6 weeks of launch of ‘Like’ button, 100,000 websites had integrated
into their backend code Nearly 3 billion clicks on Facebook’s ‘Like’
button every single day
Ad Age, 10/4/2010

17. CONFIDENTIAL
‘Like’ = Sales
Source: Advertising Age

18. CONFIDENTIAL
‘Like’ Button Evolution
‘Like’ button now integrated on 1-2 million sites
• Previously:
• Users could only ‘Like’ an application as a whole
• This prevented sharing of specific in-app content like a mini-game,
leaderboard, or virtual goods
• Now:
• Sites can now display ‘Like’ buttons for Facebook Pages
• Users can now ‘Like’ specific pages or objects within an application
• What this means:
• By liking an in-app object, a feed story will be published linking directly to
that object.
• This means in addition to purchasing a virtual good, a user can ‘Like’ it to
show it to their friends.
• This could have a significant impact on virtual good sales, as well as
spreading awareness of virtual goods as a concept.

19. CONFIDENTIAL
Facebook & Games
Justin Smith,
Inside Facebook,
1/4/2010
“33 million
people played
a Zynga game
yesterday”
Mark Pincus,
9/27/10
“33 million
people played
a Zynga game
yesterday”
Mark Pincus,
9/27/10

20. CONFIDENTIAL
Farmville
•Facebook putting changes in place so people who don’t play Farmville won’t
have to endure Farmville-related posts in their feeds
•This means people who play games can post stories to their Wall without
worrying about overwhelming their friends who aren't playing
•These feeds act as a form of instant advertising. A form of advertising that
has the credibility of a recommendation from the user's social group. This
could be very persuasive when you consider that more than half of users will
most trust friend and family recommendations, according to a study by
Vision Critical
Katie Gatto, VatorNews, 9/22/2010

21. CONFIDENTIAL
Social Media Monetization
Consumers have the
opportunity to earn or buy
virtual currency by
completing targeted
advertising offers or by
purchasing it through
direct, global payment
options
Since its launch in 2007, Offerpal has issued more than 1 trillion
virtual points to over 225 million consumers across 190 countries
Graph Courtesy of TrialPay

22. CONFIDENTIAL
Online Games Drive Offline Sales
“We work with TrialPay in a way that benefits
users,” said Sebastien de Halleux, Playfish’s
COO. “On Valentine’s Day, for example,
people could buy real or virtual flowers
through
our games; that’s a benefit.”
Results
• 60 million virtual items sold within 2 weeks
•Sold tens of thousands of real bouquets
• 50% of revenue came from a single real world promotion
Playfish’s annual in-game Valentine’s promotion: Pet Society
Free virtual currency in exchange for purchasing flowers

23. CONFIDENTIAL
Facebook Connect to Open Graph
• Facebook Connect, by all accounts, has been a huge success with a quarter of
Facebook's 500-million-plus users using it to log into third-party sites
• Logging in, at this point, is just a small part of Facebook's planned dominance of the Web
With Open Graph:
• Facebook has created a platform that allows sites and apps to share information about
users in order to tailor offers, features and services to each one’s interests and tastes –
even if that individual has never visited the site before
• Incorporates your profile info to inform the sites you visit about your likes and dislikes.
Visit Pandora and the site will start playing the music you love, or at least the music you
say you love.
• In the background, Facebook is gathering this data in its hive-mind, engendering
considerable resentment from rivals and detractors who fear the consequences of a single
company knowing so much about so many. (Forbes, 4/26/2010)
Caroline McCarthy, CNET News, 4/21/2010

24. CONFIDENTIAL
Facebook Ads: Simple User Interface

25. CONFIDENTIAL
Facebook Ads

26. CONFIDENTIAL
Like = Basketball
EXERCISE

27. CONFIDENTIAL
Facebook Ads

28. CONFIDENTIAL
ROI on Facebook
Campaign to drive attendance for hospital event
• Targeting:
• Selecting users through their social data and geographic proximity to the
various events that were being hosted
• Results:
• Over a 5 week period the targeted ads were shown 2,042,151 times
• 773 people clicked on the ads
• 17 people registered for the event directly through Facebook
• Cost was a fraction of the budget compared to spending on local newspapers
and radio
• Cost per conversion (attendee):
• Facebook: $42.80
• Radio equated to $525
• Newspapers equated to $128.53
• “What was most powerful about this campaign was not only the capability to use
Facebook to target the users that mattered to us, but the ability to do so without
the hefty budget of traditional radio and newspaper advertising.”
Jamie Bull, CommCreative Unified Marketing blog, 1/6/2010

29. CONFIDENTIAL
Facebook Ads + Twitter + PR

30. CONFIDENTIAL
Facebook & Mobile
Just getting started? Not really:
• There are more than 200 million active users currently accessing Facebook
through their mobile devices
• People that use Facebook on their mobile devices are twice as active on
Facebook than non-mobile users
• Single sign-in
• There are more than 200 mobile operators in 60 countries working to deploy
and promote Facebook mobile products
• Overall mobile use flying through the roof (Japan, S Korea, India & Russia).
Predicting that India will have a youth mobile market of 260 million by 2016 –
the biggest in the world
• Facebook has also signed deals with local mobile providers to allow free data
access to Facebook mobile to drive up subscription rates there
The mobile-advertising market for North America is expected to be $3.5 billion this year
according to GoMo News

31. CONFIDENTIAL
Facebook Places: Location Based Services

32. CONFIDENTIAL
Facebook Places: Video
http://www.facebook.com/video/video.php?v=10150257497405484&ref=mf

33. CONFIDENTIAL
Facebook Deals: Local Deals for Mobile Users
• Deal types: Individuals, friends, charity, loyalty
• Free – for now
• “They’re doing them because they’re great for users and businesses
who use FB”
• Social element key
• Offers:
• Gap giving away 10,000 pairs of jeans. When they run out, giving away 40%
discount off of any product when someone check-ins to any of their stores
• North Face giving $1 to charity
for a store or national park check-in
• Golden State Warriors giving away
access to a free event with players
if you check-in to a game

34. CONFIDENTIAL
Key Takeaways & Conclusions
• “Leveraging public social data to place relevant messages in front of
audiences willing to listen may be one of the most underestimated
impacts on marketing that the social media revolution has caused.” (Jamie
Bull, CommCreative Unified Mktg)
• “In the next 12 and 24 months, the top 10 games on Facebook will be
dominated by large brands, just like what’s happening on the iPhone.”
(Sebastien de Halleux – COO, Playfish)
•Justin Smith of Inside Facebook has
written about how the company is hoping
to get partners to convert their own
rewards programs into Facebook Credits,
used to engage in commerce within the
Facebook ecosystem. If this sounds a
little like an alternative currency in its
infancy, you're on to something.

35. CONFIDENTIAL
Key Takeaways & Conclusions
• If you plug your site into Facebook's Open Graph protocol, you are
getting tangible and valuable access to the extraordinary network that
Facebook has built. But those little ‘Like’ buttons now rolling out across
the Web belong to Facebook. Every one of Facebook's partner sites is
working, in a small, subtle, unobtrusive way, for Facebook as it seeks to
become the nerve center for the ever-growing, ever-changing Web.
• If Facebook gets its Open Graph protocol right, they will have created
something almost as robust and powerful as a government, only nimbler
and more resilient.” (Reihan Salam, Forbes, 4/26/2010)
• Yahoo CEO Carol Bartz: Who’s your biggest competitor?
• A: Facebook – not today, but they could be. If they keep going, they
will have the vault of information on everybody in the world, and
that’s valuable.

36. CONFIDENTIAL
Key Takeaways & Conclusions
• “Facebook is now the largest photo-sharing site on the Web and the
largest invite service on the Web. Getting into the local deals business
might have the same effect. Competitors will have to maneuver in order
to not be at a disadvantage and get squashed.” –Ray Valdes, analyst at
Gardner
• Davide Grasso, Nike’s chief marketing officer:
• Facebook “is the equivalent for us to what TV was for marketers
back in the 1960s. It’s an integral part of what we do now.”

37. CONFIDENTIAL
Questions?
Saralyn Bass
saralynbass@gmail.com
Twitter: sbass10080