A new way to advertise
On November 7th 2007, Mark Zuckerberg announced a "completely new way of advertising online" with Facebook Ads.
Facebook Ads allows organizations to create pages for their brand or product, and integrate into the social graph that is Facebook. People can become friends of the brand or product much the same way they become friends with each other. By aligning yourself with a brand in Facebook, you are telling all your friends that you recommend the brand. We all know the power of recommending a brand in viral marketing.
Focussed advertisements can then be customized to the person and show up on their Facebook home page as news feeds. Facebook has provided tools for marketers to see where their advertisements are and how they are doing within the social network.
Some powerful companies were on hand to assist in launching Facebook Ads including Blockbuster, CBS, Chase, The Coca-Cola Company, Microsoft, Sony Pictures Television.
On the first day over 100,000 new Facebook pages were published by organizations hoping to jump on the bandwagon.
So will this work? Certainly Microsoft thinks so. They recently invested $240 million dollars in Facebook. This seems like a great deal of money for an organization like Facebook since they only generate about $150 million in revenue at this point. The shock is that the $240 million dollars only gets them a 1.6% stake in Facebook. If Microsoft valued the company correctly, then Facebook is worth about $15 billion dollars.
If we follow the math, there are more than 50 million active users on Facebook as of November 2007 (and more than 250,000 new users per day). $15 billion divided by 50 million users is $300 per active Facebook member. I know it's much more complicated than this, but interesting all the same.
How big will this get? It could be very big since Mark Zuckerberg has surrounded himself with market leaders in launching Facebook Ads. Not bad for a guy who's only 23.
