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March 4 2009

the inside scoop from facebook advertising – the day I spent inside

Written by / Posted in facebook / 59 Comments


tim kenall, don faul, and dk at coffee shop near facebook

175 million active users, billions of friendships. That’s billions with a B.
The stats are straight up off the hook.  The full complexity of those relationships is unfathomable.

What started as a closed Ivy League system now has 175 million active users.  The fastest-growing demographic is those over 30, and the average user has 120 friends. There are 850 million photos uploaded every month. Then there are the applications that anyone can build to run on their system, fan pages, event pages, and on and on.

When you hit Google, you are looking for something specific.  When you hit facebook, you are just looking. Eyes are wide open, interested, and ready for something different. You don’t go to facebook looking to buy, you come looking to see what your friends are up to and to let them know about you.

You have no agenda, other than the fact you are up for something you haven’t seen before.

Hmmm… 175 million people, and you are catching them at that moment each week when they are looking to find out what’s new.

This creates some interesting opportunities for using facebook advertising.

I have always put the good of the world, and of my fellow man, as a high priority. This has cost me a lot of money over my lifetime, but it is the right thing to do.

I am happy to say that after meeting with executives and staff at facebook the guys and gals I talked to want the same thing. They put the user experience as way more important than cashing in a buck at your expense. I had a good talk with Andy Liu (buddytv.com, failblog.org) about this the Friday night of the Elite Retreat, driving to the airport to exchange my rental car. The fast buck has been the Internet marketers’ friend, but the long-term play is going to be with integrity and quality.

The Tuesday of the Elite Retreat, I had the pleasure of meeting with, learning from and advising some of the executives at facebook. The meetings took place at the Prolific Oven coffee shop in Palo Alto, (no ties, thank god!)_in the facebook headquarters scattered around Palo Alto, and walking in the rain on the mean streets of Palo Alto while sipping tea. It was way cool. I felt pretty important.

I got to meet with Tim Kendall, Jeff Iden, Don Faul, and Alex Schultz, plus some others that I was asked to keep off the blog.

I can’t disclose everything discussed, but we went over facebook’s quest to reach more unique advertisers and to offer more and more quality products to its users.

It was confirmed that the thumbs-up and thumbs-down by the ads actually result in real measurable changes for the advertisers. It was also confirmed that the interests you can target when advertising are taken not just from the profile the user sets up initially, but more and more from things posted on their wall.

They also confirmed that each and every ad is still reviewed by a human being, but long –term, their philosophy is to let the users guide the facebook computer as to which ads are appropriate or not. This eventually will hopefully result in Nancy Temple getting served ads from her church and related products, while Billy Boister gets hit with ads from the new club opening and the car show.

The really exciting thing is where this is headed. Google knows pretty much one thing about you as a user: what you are searching for right now.

Facebook knows a lot more than that. Facebook is very protective about the info of a particular user, even though their data is more or less public if you are able to view that users profile. On the other hand, facebook has the potential in the future to look at what a user is up to, as well as what their friends are up to and how these relate.

Imagine your friends and yourself are planning a trip to the river, to wakeboard. It’s all over yours and their walls on facebook. It also so happens that the Purple Doves are playing a free concert at the river, sponsored by Judy’s book, as part of their Green Energy program.

Facebook knows all these details. You and your friends have typed it onto each other’s walls for the world to see. Would it be inappropriate to show you an ad of the new hybrid SUV that can haul a trailer full of Jet Skis? That the SUV company promises that 10 percent of their profits will go to buy electric- generating windmills!

It can get even deeper than this, if you imagine things your friends are doing, that you don’t even know about. Taking into account social trends of what can be predicted you will be into in a week or two?

As a user, I would much prefer the ads I am shown each day to actually resonate with what I might like, such as a new Whole Foods location or a better surf report website, rather than trying to sell me Viagra or a new copier which I have no interest in.

If they showed me the new watch that Brian Norgard or Shoe just bought, it will have a have a huge effect  on me next time I see Shoe and see his watch. Facebook can know what watch Shoe buys, even before I do.

Facebook currently still has a small number advertisers compared to a network like google, with many of those advertisers selling the same products, to hundreds of millions of users. In other words, there is only a fraction of products being sold that could be.  It boggles the mind to think of what could be sold on facebook and how it could be done.

Will facebook’s ad revenues end up being bigger than Google’s? Everyone I have asked has said No, but I wouldn’t bet on that so early in the race.

I am deep into the facebook wave now and just starting my bottom turn. I predict that those who catch the wave now will have a good long ride, with the wave building in height for quite a while to come.

In the coming weeks, I will be doing testing of different strategies that will help both advertisers and facebook to increase bottom-line profit while benefiting consumers, and then reporting back to facebook with recommendations.

I’ll keep you posted.

  1. Roseanna said on March 4th, 2009 at 4:59 pm

    Awesome Deeks!! It really sounds like with all this time and effort you will really be benefiting facebook! Good work!

    Reply
  2. dk said on March 4th, 2009 at 5:42 pm

    Thanks shoe, you rock.

    Reply
  3. Steven-Sanders said on March 4th, 2009 at 6:19 pm

    Very cool! One of these days… I just might visit Facebook. lol

    Reply
  4. Brian said on March 4th, 2009 at 6:36 pm

    Thanks for sharing this DK.

    Reply
  5. Kevin Dando said on March 4th, 2009 at 6:38 pm

    Great info. Really appreciate the detail. PBS has been doing Facebook ads for more than a year, and we’re really bullish them. The interest targeting alone is *amazing*.

    Reply
  6. Scott Skinger said on March 4th, 2009 at 6:53 pm

    Very cool. Damn, I didn’t get to see the “inner cubicles” of Facebook. You get to do all of the fun stuff DK.

    Reply
  7. Roseanna said on March 4th, 2009 at 7:13 pm

    Come on Dk, don’t pretend like you don’t click on the viagra ads. 😉 jk.

    In the past, although I look at the ads generated on my page, I have thought of the ads as more of an annoyance. After you’ve seen a million ads that don’t pertain to you, it becomes very easy to ignore the ads completely. If the ads did pertain to my likes and dislikes I would be way more apt to click on them. The day the ads say, “click here to win a date with the luscious Fabio,” You bet your sweet ass I would be clicking!! ;o) At this point, the ads would be something cool and “useful” (admit it, Fabio is useful) instead of an unnoticed space filler. Amen for what’s to come with those facebook ads.

    Reply
  8. Dan Stack said on March 4th, 2009 at 7:31 pm

    Interesting stuff! I’ve always wondered what it’s like behind the “social media curtain.” I’ve had similar experiences with FB. They’re approachable and customer oriented.:)

    Reply
  9. Ryan Quiel said on March 4th, 2009 at 10:07 pm

    I agree with you that their ads can only go up in relevancy and diversity. When I see the same Obama government check picture for all three ads, on every page, it reminds me of the beginning days of Overture.

    Also, ads that have text say one thing “Macbook Air” but then show a Macbook graphic need to be fixed during the “Human Screening” if they want a higher CTR.

    DK, again you rock man, and my online businesses have never been the same since ThinkTank. Thank You!

    -Ryan

    Reply
  10. dk said on March 4th, 2009 at 11:09 pm

    Kevin, What has PBS been marketing on facebook?

    Reply
  11. Chris Jacobson said on March 4th, 2009 at 11:49 pm

    Very cool look at the inside of Facebook. Did you see Zuckerberg?

    Reply
  12. Kudzai said on March 5th, 2009 at 12:12 am

    DK… cheers for this one man… it’s an interesting one. There is a lot of confusion at FB at the moment, it seems like.

    Reply
  13. dk said on March 5th, 2009 at 12:23 am

    Ryan,
    I have heard that over and over from those who went to the dkthinktank. Some were new partnerships forged, for others it was great projects given to them as a result, and for others they walked away with that idea that took them to the next level. I am thrilled to hear of your success!

    Reply
  14. dk said on March 5th, 2009 at 12:26 am

    Hey Chris, nice to see you over here. Nope, many of the guys I met with answer to Zuckerberg, but I have yet to meet the founder.

    Reply
  15. David King said on March 5th, 2009 at 1:42 am

    That would have been sweet!
    very cool! thanks for the post! I am subscribing now!

    Reply
  16. dk said on March 5th, 2009 at 1:44 am

    @David King:
    Cool David, thanks for signing up. The facebook guys are awesome, and we are working on some fun things for the future.

    Reply
  17. Manuel said on March 5th, 2009 at 3:25 am

    Nice- I wish you would have uploaded some more photos of their office.

    Reply
  18. Depeche Mode said on March 5th, 2009 at 6:40 am

    I have tested facebook ads and it resulted in 0 return… the same ads on google ads gave me a 2700$ profit… Possible their users might hop back in after a certain time but not every deal can be followed with cookies of 60 days so to speak. I was not convinced.

    Reply
  19. Cher said on March 5th, 2009 at 8:12 am

    Excellent re-cap DK! Even your blog has triggered some ideas in me, I can’t imagine what inspirations you received by actually being there. Cheers for sharing!

    Reply
  20. PerfectMOney Share Idea said on March 5th, 2009 at 10:12 am

    Will Facebook Ad revenue beat Google.well I dont ,more over why does Facebook so ego not to put adsense in there system,it is tagged which is similar to FB and they are OK with adsense at there page and they could get “alot of cash from the click for just being a google Love.however,if this is all about competitions and not about Money ,I concern about time facebook have to spend for research actually made a lot potential loss for them.If I were Mark.I will use time during research with Adsense inside ,for me the time frame is too valuable for just being a research only

    Reply
  21. Betsy said on March 5th, 2009 at 11:52 am

    I agree, this is a fantastic idea, and the numbers dk quotes are impressive. However, I wonder if someone at facebook isn’t already onto this concept. When I checked my home page this morning, these were the ads I saw: Freelance Writing Network; several IQ Tests; several Free Purple (or Pink, or Green) Mac notebooks; a Star Trek Quiz; a Bubble Boomer Game; Who’s Searching for You Online; Sign Up for Free Products. Trick to Whiter Teeth; a lot of ads for Acai Berry; Get Your Book Published; and Get Rid of Wrinkles.

    Now, anyone who scanned my profile even briefly knows that (a) I’m in the age group that thinks about Wrinkles and Whiter Teeth a lot; (b) I do writing, rewriting, and editing for online clients as a freelancer (who might use a laptop); and I’m a long-time Star Trek and spinoffs fan. So the only ones of those ads that might be considered just a general casting of the net to an untargeted audience would be the Bubble Boomer Game (not interested) and the Who’s Searching for You Online? (also not really interested).

    So I’m wondering if this might not already be happening somehow. Or maybe those were just lucky guesses… but no Viagra and no copiers were offered.

    Not to downplay everything in dk’s awesome article at all, but just wondering…

    Reply
  22. dk said on March 5th, 2009 at 12:43 pm

    Betsy, Facebook is already gathering info off of your wall to some degree as you could deduct yourself. Now they are working on even better methodologies for doing so, and making the ads even more relevant.

    Reply
  23. Rus said on March 5th, 2009 at 7:43 pm

    Nice thing about facebook. Is the surging popularity.

    Reply
  24. Doug said on March 5th, 2009 at 11:21 pm

    Great post DK! It was good seeing you in SF. Facebook was cool but I still like the food better at Yahoo! :)

    Reply
  25. dk said on March 5th, 2009 at 11:28 pm

    @Doug:
    I really got into the turkey spinach crepe things, and the chocolate milk. Shoe and I were killing the chocolate milk like there was no tomorrow.

    Reply
  26. Sozein said on March 5th, 2009 at 11:44 pm

    “In no way would I imply that Google has maxed out on their ability provide value to advertisers, but at the moment Facebook provides ridiculous value to advertisers if you can figure out how to utilize it properly.”

    Wow. The way you said it here makes me realize how much potential Facebook has to all who advertise on the internet. With the growing number of Facebook members each day, all of whom are sharing and talking about their interests and provided that FB can maintain privacy poliices with their members intact, it can be possible to seriously target a specific market for any kind of business. And like you said, this information can be very valuable to businesses out there.
    But I think that the best thing that you mentioned is how FB cares more about user experience than making money. So, even if you, FB and everyone else involved get to unleash that potential (I’m staying tuned to find out how), which may become better than the info that Google can provide, I know Facebook cares about me (as another FB user). I’m sure they’ll keep the best interests of their members at heart. This is still a HUGE potential, though. :)

    Reply
  27. David Brim said on March 6th, 2009 at 10:44 am

    Awesome post DK! Sounds like it was a great experience.

    Thanks for sharing. I look forward to chatting soon & catching up.

    Cheers

    Reply
  28. NaS said on March 8th, 2009 at 1:16 am

    It’s nice that facebook now supports multiple languages, but at the same time it should immedialy hire experts for each of those language, or otherwise, sexcually offensive ads likes for “how to prolong female ejaculations” (literally) would pop up aggressily.

    Reply
  29. Doug said on March 8th, 2009 at 10:55 am

    @dk:

    Yea, I should have tried that. They did have a great selection of goddies and drinks there though!

    Reply
  30. Brent Csutoras said on March 10th, 2009 at 7:12 pm

    Great article and insight DK. Facebook will be very lucky to have you working closely with them.

    Reply
  31. Matt Inertia said on March 11th, 2009 at 5:37 am

    Facebook is great for targeting a demographic regardless of paid ads. I’d recommend any business owner with a niche to hit FB and start hunting around for groups and events relating to your niche. With the sheer volume and variety of users available to you it’s easy to find targets…

    Reply
  32. Social Spin said on March 14th, 2009 at 6:00 am

    facebook will “KILL” google and its not far away.

    social search is on the rise! why search on google if you can intercat with the brand on facebook

    Reply
  33. Countrystarr said on April 7th, 2009 at 12:48 am

    This is great info. I had no idea that Facebook was branching in to this type of marketing. I’m going to try it!

    Reply
  34. ljwaks said on April 28th, 2009 at 8:09 pm

    One of the comments concerns the return on investment in Facebook ads. The comment stated that his targeted ad got no clicks!

    There have been artivcles about this problem for at least 18 months. People on Facebook are not there to scan ads, and most ads have very low returns.

    As a result, over time either Facebook will have to figure out how to make the ads a more integral part of the facebook experience or lose advertisers, ads, and revenues. Whether or not they are in it for the money (Come on!) without it they will go out of business.

    The post, by not taking up this issue front and center, is very disappointing.

    Reply
  35. dk said on April 28th, 2009 at 8:38 pm

    @ljwaks:
    Since my visit I have spent a fair amount of time playing with facebook advertising. I have some campaigns (top secret 😉 that have been doing very, very well. It is not as straight forward ad running adwords would be. If you are selling staplers, you can bid on staplers and get clicks and sales on adwords. With facebook, you need to be thinking much more globaly, and really getting into the mindset of the user.

    I don’t think it will be something most people will be able to figure out, but if you are clever enough, and do enough testing, there is great success available.

    Stay tuned for more details!

    Reply
  36. OMPundit said on May 22nd, 2009 at 9:21 am

    I’ve been using facebook to adveriste with for a few months ago but never realized or thought about what goes on inside the organization. Really good post with lots of insight, thanks!

    Reply
  37. Kegege peter said on May 30th, 2009 at 4:50 am

    Cool one u have here. Am already recommending it my fb friends

    Reply
  38. Scott Turke said on June 8th, 2009 at 9:24 pm

    How many viagra ads does it take to screw in a light bulb?

    Seriously, I presume Facebook is profitable, or at least moving toward profitability. Otherwise, no entity, regardless of the amount of users, will be able to sustain itself long-term, unless it gets acquired.

    Reply
  39. JamesBenford said on June 23rd, 2010 at 1:41 pm

    DK, thank for for your support!

    Reply
  40. Shady AbdelKarim said on June 26th, 2010 at 9:30 am

    Facebook and Advertising are two good signs!

    Reply
  41. SnowBall said on July 16th, 2010 at 7:26 pm

    @Roseanna: I know exactly what you mean with the ads being an annoyance. I think that now, with Facebook, the ads can go from being an annoyance to actually helping facebook users. For instance, I really like guitars. And if Facebook knows that then they can guide me gently to a new website where they sell vintage guitars at good prices where i could eventually find that ’66 Fender Strat that I have been looking for but was always too expensive. This is way less annoying and way more helpful. Genius!

    Reply
  42. rob said on January 17th, 2011 at 3:18 pm

    wow a bunch of geeks with their faces deep in a laptop. Sounds exciting. Oh yes they are changing our world by making people slaves to a machine and exposing all of their innermost thoughts and desires to marketers. I am not impressed. But hey Mark is a billionaire and that is really what everyone is impressed with. Greed drives our modern society. Its worshiped. Very sad day indeed for human kind. If only humans would talk to each other without having to project a narcissistic image through a n electronic front. But hey he hit the nail on the head and tapped into the primal psychology of human kind in regards to social behavior. bravo. Now the entire world is wasting time online. Great job DUDE !!!!

    Reply
  43. Avenir said on April 20th, 2011 at 6:18 am

    One of the best things about Facebook advertising is the ability select who sees your ad using a number of variables, including keywords. Thanks for Informative sharing..

    Reply
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