Two new faces of Facebook

How to benefit from Facebook’s new revenue opportunities

We all know the story of how a Harvard student built a social network from his dorm room and became the sixth richest person in the world (net worth $44.6 billion at last count). We may even have seen the Hollywood version of events.

Several years later, Facebook now boasts 1.71 billion monthly active users – that’s over 23% of the world’s population – which begs the question, how much bigger can Facebook get?

What do you do when you’ve taken just about as much of the cake as you can, but you’re still hungry? You find a different cake.

Facebook has recently announced two new initiatives Facebook Marketplace and Facebook at Work. Marketplace is nothing new as such, as buying and selling has taken place on Facebook via Facebook Groups for many years. However, Marketplace will make it easier for users to browse items for sale in the local area much more easily, and the fact that Facebook is willing to devote one of the five on screen icons on their mobile app to Marketplace underlines how seriously they’re viewing this opportunity.

Not so well-known, Facebook at Work offers co-workers the chance to ‘Connect better, work better’. It creates a private environment for your workplace where users can follow colleague’s updates, share ideas, have group chats and video meetings, and search people and projects to find information easily and efficiently.

This all sounds very useful, but what’s behind these launches from Facebook’s perspective? Different cakes to eat (and new revenue streams to capture)?

Product ads have been available on Facebook for a while now, however, the majority of success stories relate to retailers who sell low cost, low consideration products. By increasing the prominence of buying and selling products via Marketplace, Facebook are hoping that people will become more comfortable buying bigger items via the platform, which in turn could improve the performance of product ads that feature bigger ticket items. Furthermore, if you’re looking at buying a second hand television via Marketplace, don’t be surprised to see retailers promoting their brand spanking new TVs in your news feed.

On the Facebook at Work (FAW) side of things, as well as generating revenue in its own right (it’s currently free but a fee-based subscription model will materialise in the future) the platform could offer the potential to link users (and therefore their data) from the FAW platform across to Facebook itself. If this linkage took place, better quality user data for parameters such as job type, job seniority, industry type, company size etc. will be captured, allowing much better targeting, especially for B2B advertisers, who will spend more on Facebook ads as a result.

Should this be of concern to LinkedIn? Yes and no. Facebook have 15x more active monthly users than LinkedIn, and Facebook users spend much more time on the platform per month, so advertisers have a greater opportunity to reach their audience via Facebook. However, in our experience B2B advertising is less effective on Facebook versus LinkedIn because of context (LinkedIn = work, Facebook = life). Additionally, the strength of the job-related targeting features will entirely depend upon the take up of FAW as a product, and therefore the size of the audience.

So Facebook has room to get significantly bigger, at least in revenue terms. It seems unlikely that the upcoming chapters of the Facebook story will have Hollywood falling over themselves to film The Social Network 2, but I’d suggest that Mr Zuckerberg will happily console himself with an ever increasing share price and rising ads revenue.

If you’d like to explore how to take advantage of the latest developments in Facebook advertising for your business, please get in touch.

Post by

Dan Watt