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FACEBOOK

THE GROWTH OF AN
ADVERTISING GIANT

SO, YOURE
A MARKETER

About
Works at HubSpot

You know
Facebook, right?

We thought so too. Until


we realised just how much
we DIDNT KNOW about
their advertising strategies
over the last few years.

I mean, did you know


that the first way to advertise
on Facebook was through
Flyers and they have
a Marketplace
where you can buy
and sell your stuff?

WE DIDNT!
So we decided to share their story
with you because as marketers
we need to closely watch the
trends in advertising, and with
Facebook being such a big player,
we cant afford to miss a trick!

SO LETS
START
AT THE
BEGINNING

Recent
2013
2012
2011
2010
2009
2008
2007
2006
2005

2004
Founded

Mark Zuckerberg launches


Thefacebook at Harvard
University. It quickly starts
to spread like wild fire.

Image source: Mashable

It looks like this

The majority of revenue


comes from Flyers which
are mostly purchased by
students or small local
businesses for $10-$40 per
day who want to target an ad
to a specific college campus.

Source: Quora.com

Flyers are advertisements


displayed along the side
of the Facebook homepage
and are controlled by
Facebook.

They are mostly used by


Facebook members to
advertise parties or other
social events on campus.

They look like this

Image source: College Web Editor

They look like this

And make up
most of Facebooks
revenue for
that year
Image source: College Web Editor

Facebook later changes it to


an auction-based CPC model,
called Flyers Pro.
Advertisers can set a max price
for what theyre willing to spend
and can target based on gender,
age, location, political views,
relationship status, education
status, and workplace.

10,000,000,000

1,000,000,000

500,000,000

100,000,000

50,000,000

10,000,000

400,000

$382,000

100,000

User count
Revenue

1,000,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 Q2

Recent
2013
2012
2011
2010
2009
2008
2007
2006

2005
2004
Founded

It looks like
this now

THEFACEBOOK
CHANGES
ITS NAME TO
FACEBOOK

They have one full time ad


salesman, Kevin Colleran.
His first big ad deal comes
from Party Poker.

They buy ads on a CPA


(Cost per acquisition) basis,
a flat fee of $300 for each
new subscriber who signs
up and puts at least $50
into a gambling account.

Source: The Facebook Effect

It is a HUGE deal for


Facebooks revenue and
brings in $60,000 each
month just for the 200
members on average
who sign up!

Source: The Facebook Effect

It swiftly comes to an end


though, when a year or so
later gambling is outlawed
in the United States, and
Facebook drops Party Poker.

SURPRISINGLY, SOME
MAJOR COMPANIES
ARE ALREADY JOINING
IN THE FACEBOOK
ADVERTISING PARTY.

Apple is one of the biggest


revenue generating advertisers
in 2005 for Facebook.
They sponsor an Apple Group,
which pays Facebook $1 per
month, per member. As the Apple
group grows, Facebook begins
to make hundreds of thousands
of dollars per month.

Another big player in the


sponsored group game
is Victorias Secret.
Facebook requires them to
make a minimum monthly
payment of $25,000.

Source: The Facebook Effect

10,000,000,000

1,000,000,000

500,000,000

100,000,000

million
$9 million

50,000,000

10,000,000

100,000

User count
Revenue

1,000,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 Q2

Recent
2013
2012
2011
2010
2009
2008
2007

2006
2005
2004
Founded

Image source: Mashable

It looks like
this now

Facebook allows
everyone over
thirteen years
old to become
a member.

The offers for


partnerships and buy
outs start to flood in.

MICROSOFT
GETS LUCKY!

And becomes the


exclusive provider
of banner ads and
sponsored links
on the site.

Source: Microsoft.com

Viacom
$1.5 billion
MySpace

Google
(twice)

COMPANIES
THAT TRY
TO BUY
FACEBOOK

News Corp

NBC
Yahoo
1 billion

Microsoft
$15 billion

Unnamed
New York
Financier
$10 million
Friendster

Viacom
ined
Decl
$1.5 billion
ined
MySpace
Decl

Google
ined
Decl
(twice)

COMPANIES
THAT TRY
TO BUY
FACEBOOK

ined
News
Decl Corp

Microsoft
ed
eclin
D
$15billion
1.6% stake sold

NBC

ined
Decl

Yahoo
ined
Decl
1 billion

Unnamed
ned
New
iYork
Decl
Financier
$10 million
ined
Friendster
Decl

ZUCKERBERG
HOLDS FIRM.

10,000,000,000

1,000,000,000

500,000,000

12

million
$48 million

100,000,000

50,000,000

10,000,000

100,000

User count
Revenue

1,000,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 Q2

Recent
2013
2012
2011
2010
2009
2008

2007
2006
2005
2004
Founded

It looks like
this now

FACEBOOK
LAUNCHES
MARKETPLACE,
AN APP FOR
CLASSIFIED
LISTINGS.

It is used to list what you


have and what you want
within your networks.
Random fact:
This idea was catalyzed by
a mock-up built entirely in
Excel by Josh Pritchard.

WAIT,
WHAT?
Facebook had a Buy
and Sell Marketplace?
Is it still going?

YUP!

In March 2009, Facebook


approaches Oodle, an online
classified ads service company
to take over the Marketplace.

Source: Facebook

They build an entirely new


marketplace focused on
giving people a place to buy,
sell, or give things away to
the people they know.

It still continues today


and looks like this

FACEBOOK
LAUNCHES
THE MOBILE
VERSION OF
ITS WEBSITE

Facebooks mobile website


lets users surf Facebook on
a website optimised for
small screens. They can
upload photos and notes, send
and receive messages, wall
posts, and pokes using SMS.

10,000,000,000

1,000,000,000

50

million
$153 million

500,000,000

100,000,000

50,000,000

10,000,000

100,000

User count
Revenue

1,000,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 Q2

Recent
2013
2012
2011
2010
2009

2008
2007
2006
2005
2004
Founded

While the rest of the world falls


into a recession, Zuckerberg
steps up the advertising game
at Facebook.

Any commercial entity can


now create a Page for free

The intention is that those


Page owners will find
ways to spend money
through advertising their
Facebook Page.

Facebook invests
more in their mobile
strategy and now
allows members to
comment on Friends
status updates.

The service is so popular


that nearly a million
mobile comments are
posted in the first 24 hours
after the updates release.

Source: Mashable

10,000,000,000

150

million
$272 million

1,000,000,000

500,000,000

100,000,000

50,000,000

10,000,000

100,000

User count
Revenue

1,000,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 Q2

Recent
2013
2012
2011
2010

2009
2008
2007
2006
2005
2004
Founded

FACEBOOK
BEGINS TO
REALISE THEIR
POTENTIAL
FOR ONLINE AD
DOMINATION.

And start to provide


more advanced ad
targeting options
to their advertisers.

They introduce
language and
geographical
based ad targeting
to entice more
advertisers

Page owners
can set up and
manage their own
ads for the first time.

10,000,000,000

1,000,000,000

350

million
$777 million
65 million

500,000,000

Mobile user

100,000,000

50,000,000

10,000,000

100,000

User count
Revenue

1,000,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 Q2

Recent
2013
2012
2011

2010
2009
2008
2007
2006
2005
2004
Founded

FACEBOOK
RELEASES THE
FIRST MOBILE
APP FOR
FACEBOOK

And introduces
the Like button
for external sites

10,000,000,000

600

million
$1.8 billion
100 million

1,000,000,000

500,000,000

Mobile user

100,000,000

50,000,000

10,000,000

100,000

User count
Revenue

1,000,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 Q2

Recent
2013
2012

2011
2010
2009
2008
2007
2006
2005
2004
Founded

FACEBOOK
INTRODUCES
SPONSORED
STORIES FOR
DESKTOP

Image source: The Next Web

Users who Like Ben & Jerrys


will see updates like this one in
their News Feed.

Advertisers
can choose
to highlight
particular user
actions so that we
see their activity
in our news feed.

10,000,000,000

1,000,000,000

500,000,000

Mobile user

100,000,000

50,000,000

10,000,000

845

million
$3.71 billion
350 million

100,000

User count
Revenue

1,000,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 Q2

Recent
2013

2012
2011
2010
2009
2008
2007
2006
2005
2004
Founded

INTRODUCES
MOBILE ADS
FOR THE FIRST
TIME

They appear
within our News
Feed so as not
to interrupt our
Facebook user
experience.

FACEBOOK
INTRODUCES
THE SOCIAL
GRAPH

When a user friends another user,


Likes a page, comments on a photo,
listens to music, or plays a game,
a connection is written to
the Social Graph, which is then
provided as data for advertisers.

All of these stories and the


subsequent connections
create valuable and compelling
marketing opportunities
for businesses on Facebook.

FACEBOOK INTRODUCES
THE FACEBOOK
EXCHANGE

Its a new way of purchasing


Facebook ads through
real-time bidding.
Advertisers and agencies are
able to use cookie-based
targeting to reach their audience
on Facebook with more timely
and relevant messages.
Source: Facebook

Facebook Exchange advertisers


use first-party and third-party data
to decide who to serve ads to. Firstparty data refers to the cookies
that sites and ad networks put on
users browsers, and third party data
is information collected by research
firms and data brokers.

10,000,000,000

1,000,000,000

500,000,000

Mobile user

100,000,000

50,000,000

10,000,000

1.06

billion
$5.85 billion
543 million

100,000

User count
Revenue

1,000,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 Q2

Recent

2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
Founded

FACEBOOK
INTRODUCES
LOOKALIKE
AUDIENCES

Which helpadvertisers reach


potential customers
who share similar
characteristics with their
current ones.

Advertisers are able to upload


their customer profiles,
referenced by emails or phone
numbers, and then Facebook
targets a similar profile of
Facebook users for the advertiser.
The personal information of
the lookalike is never given out.

Re-targeted ads now appear


in the News Feed.

They mimic the look of Sponsored


Stories, but are aimed at users
based on their browsing
history outside of Facebook.

It takes data from the Facebook


Exchange Program (external
sites) and places ads in the News
Feed instead of just the right side
bar.

Advertisers can now create


Unpublished Posts or Dark
Posts that intentionally do not
appear to all fans of their page.

It means advertisers can post an ad


to their Facebook Page and choose
WHO from their fan base to show
it to, based on all the usual targeting
criteria AS WELL as interests.

Mobile has climbed steadily


upward as a percentage of
Facebooks total ad revenue.
It grew from 14% to 23% to
30% and now made the biggest
quarter over quarter jump to 41%.

Source: AdAge Digital

As of June 30th, there are


819 million mobile monthly
active users on Facebook,
up 51% over the previous
year.
Ad Age Digital

10,000,000,000

1,000,000,000

500,000,000

Mobile user

100,000,000

50,000,000

10,000,000

1.15

billion
$1.18 billion
819 million

100,000

User count
Revenue

1,000,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 Q2

SO WHATS
NEXT?

Facebook has started


to release regional data for
the first time to help advertisers
understand how people use
the network.

It is also part of a larger push


to go after dollars earmarked
for TV commercials, the top
choice among advertisers when
they launch campaigns.

Source: yahoo news

The average time spent


daily with digital media is
expected to surpass TV
viewing for the first time
this year, according
to eMarketer.

And Facebooks ad
revenue is estimated to
reach $7.64B by 2014.

SO ITS TIME TO
START THINKING
ABOUT YOUR
ONLINE ADVERTISING
STRATEGY, PEOPLE!

Are you taking full


advantage of all of
Facebooks advertising
features?
We compiled the best tips from four top European
experts on the subject, so you can become a Facebook
Advertising Master!
Download your copy here
http://bit.ly/1aEtMCH