Where eyeballs go, advertisers follow as 'cost per click' draws Facebook fans

MEDIA & MARKETING:The Facebook social network is becoming an important advertising medium

AS ITS user base increases exponentially, the Facebook social network is becoming an important advertising medium. The company claims that 1.7 million people in Ireland have a Facebook account and one million of those regularly log onto their Facebook page. That’s a jump from 300,000 account holders in January 2009. Across the rest of the world, Facebook’s membership now exceeds 500 million people.

Where eyeballs go, advertisers follow. Recent reports suggest Facebook garnered €532 million in advertising last year and that this will increase to €760 million in 2010. Facebook’s online ad sales department of 85 people for Europe, Middle East and Africa operates out of the companys Dublin office and is led by American Rick Kelley.

As is the case with Google, Facebook is now being used as a marketing and advertising medium by many small Irish firms. Advertisers can buy a direct response ad which appears on the right hand side of every page apart from the home page and pay on a cost per click basis, with the advertiser setting a maximum spend per day. “Cost per click is our most popular format with advertisers,” says Kelley.

Alternatively, advertisers can target specific types of Facebook users on a cost per 1,000 impressions basis. This option requires a minimum spend commitment of €5,000.

One of the attractions of Facebook is its claimed targeting ability. So, for example, if an advertiser wants, it could create targeting filters for its ads so that they just reach girls aged between 18 and 21 living in Dundrum who are in college.

One regular Facebook advertiser is Cork T-shirt company Hairy Baby, led by Daragh Murphy. The company spends €30 a day advertising on the site, mainly targeting people overseas. “We tried Google ad words in the past but I found it far too complicated,” says Murphy.

Robert Blandford of software company Decision for Heroes says he has spent a few thousand euro advertising on Facebook to attract people to his Facebook company page. But he’s taking a break from advertising to determine what difference the ads make.

Other small businesses like the fashion store Alila on Drury Street in Dublin and Base Pizza in Terenure have boosted their business by taking advantage of the free facility to set up a company page on Facebook.

According to Ali Murray, who opened Alila three years ago: “I link to my Alila page from my personal Facebook page and so do all my friends. I spend a couple of hours at home each evening updating my page and I can see I get business from the page when I put the effort in.” Murray says she is considering paying for advertising on Facebook in the future.

One of the challenges for Facebook is to convince people to pay to advertise when they can generate business for their company on the site for free.

Like many big brands, Diageo started using Facebook last year but it spends very little advertising on Facebook. Instead the drinks giant interacts with customers through its free corporate pages.

Diageo’s digital manager Asta Lund observes: “We occasionally advertise on Facebook but for the most part we see social media sites as somewhere you don’t pay. We call it earned media. There was one six-day period in July where we had over one million impressions on our Guinness Ireland page on Facebook.

“The big benefit of Facebook to us is the depth of engagement we get with users and that’s a lot more meaningful than just placing an ad. Our Captain Morgan Facebook page helped us a lot in launching that brand in Ireland.”

Lund notes how Facebook has become more adept at monetising the site. “Brands must have an official page to use Facebook and there are rules and regulations about the type of interactions you can implement. You can no longer run a competition on your home page wall. You have to have a separate competition tab which Facebook charges for,” she says.

While Facebook can be an effective platform to engage with consumers, there are also risks associated with entering into a dialogue over which the brand has no control. For instance Nestlé’s Facebook discussion page is stuffed with comments from aggrieved citizens who say they are boycotting the company, citing allegations of poor sustainability practices.

According to Rick Kelley, most of Facebook’s advertising comes from call-ins. But his large sales team also does cold calling to companies they see advertising on other sites, as well as pitching ad agencies for big brand adverts. Ramping up its sales push, Facebook is now starting to target businesses with less than 2,000 Facebook “friends” to use advertising to increase their number of friends.

To help the sales team generate business, Facebook also has lead generators who track advertising in Ireland, for example, and then identify similar companies in the same sectors for the UK, France, Germany etc.

Kelley says: “Making cold calls from Facebook is a salesperson’s dream. If you leave 10 voicemails saying you are calling from Facebook, you get about eight people calling back for more information.”

siobhan@businessplus.ie