Facebook: We're Bigger Than American Idol
NEW YORK (
) -- Why is
taking cheap shots at
American Idol
like this one in its IPO filing:
"In December 2011, an advertiser could reach an estimated audience of more than 65 million U.S. users in a typical day on Facebook. By comparison, the 2011 season finale of American Idol was viewed by an estimated U.S. audience of 29 million people."
When it comes to revenue to support a mega valuation of as much as $100 billion, Facebook is a story about 21st century advertising prowess more than anything else. Facebook CEO Mark Zuckerberg included a letter in the S-1 filing stressing that the social network didn't start as a company and still wants to be much more than a company, but let's face capitalist facts: if it wants a valuation of $100 billion, facilitating Arab Spring is less important than attracting advertising dollars.
Indeed, Facebook made its advertising pitch about its advertising prowess in the S-1 filed on Wednesday afternoon. The company noted that the substantial majority of its revenue -- which reached $3.7 billion in 2011 -- is generated by advertisers from developed online advertising markets including the United States, western Europe, Canada, and Australia.
Facebook wants you to think it is all about changing the world, but to go public at $100 billion it needs advertisers more than social revolution. |
There were plenty of Facebook advertisers that got some free ad space in the Facebook S-1, including
Nike
(NKE) - Get Report
,
Starbucks
(SBUX) - Get Report
,
Red Bull
, and
Wal-Mart
(WMT) - Get Report
.
Here are some of the other "Powerpoint bullets" of the Facebook advertising pitch it made as it tries to sell its IPO on the investing public.
Advertising spending globally in 2010 was $588 billion.
Television, print, and radio accounted for $363 billion, or 62% of the total advertising market in 2010. But that's going to change, according to Facebook, which quotes one "industry source" for all of its advertising analysis (Interpublic Group, the global ad agency, had been an investor in Facebook, though it sold its stake ahead of the IPO).
From 2010 to 2015, the worldwide online advertising market is projected to increase from $68 billion to $120 billion, representing 12% and 16%, respectively, of the worldwide advertising market.
The global mobile advertising market was $1.5 billion in 2010 and is expected to grow at a 64% compound annual rate to $17.6 billion in 2015, according to Facebook's source. Facebook does not currently show ads or directly generate any meaningful revenue from users accessing Facebook through mobile products, but said in the S-1, "we believe that we may have potential future monetization opportunities such as the inclusion of sponsored stories in users' mobile News Feeds."
Even if the lack of Facebook revenue bang for consumers mobile buck might surprise some, the social network is pumping its affiliation with the biggest global brands in the world until mobile ads dial up.
In the Facebook IPO filing the social network touts the fact that in 2011 its advertising customers included each of the 100 largest global advertising spenders.
"We believe that these brand advertisers will increasingly dedicate a portion of their advertising dollars to Facebook because the broad audiences they are trying to reach are active on Facebook on a daily basis, because we can reach their desired audiences with precision, and because they can spark word of mouth marketing through Facebook."
(That's where the American Idol comparison came in.)
Among the biggest name spenders:
Nike launched its "Write the Future" campaign on Facebook as an integral part of its 2010 World Cup marketing effort. The launch placement was seen by 140 million users in 20 countries and users engaged with the message more than seven million times, Facebook says.
American Express
(AXP) - Get Report
purchased ads on Facebook and put its Facebook Page at the center of its advertising campaign in November 2010 to introduce and promote its local market focused "Small Business Saturday." The ads reached 84 million Facebook users over the three week campaign. American Express continued the campaign in 2011. The campaign reached 91 million people, including 74 million who were shown an ad that featured a connection with their Facebook friends. American Express saw a 23% increase in card member transactions at small business merchants on Small Business Saturday.
Walmart
purchased advertising on Facebook targeting users in the United States between the ages of 18 and 49 during the days surrounding "Black Friday" in November 2011. The campaign, which encouraged users to download a Black Friday shopping map of their local Walmart U.S. store to help them find the best pricing, reached 60 million Facebook users.
Diageo
, the world's largest producer of spirits, purchased advertising on Facebook for a portfolio of its brands, including Captain Morgan rum and Smirnoff vodka, in order to increase market share for its products by targeting users in the United States over the age of 21. The campaign reached 50 million Facebook users, drove a 20% increase in offline sales, and achieved a significant return on investment.
Providing a word of mouth spark for revolt in the Arab world is fine and noble, as is helping to make China more democratic -- though Facebook said in the IPO filing it has no way, or even a concrete idea of a way, to access the Chinese market today.
Proving it can spark word of mouth campaigns for global brands trying to go social, and spiking ad revenue as a result, and moving those billions to the bottom line, is what gets the market's attention, anyway, even if Zuckerberg wants to make a better world.
-- Written by Eric Rosenbaum from New York.
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