Facebook has put the classic direct marketing techniques of profiling and targeting at the heart of its $5bn IPO as it detailed its offerings for advertisers and marketers, despite some concerns about effectiveness of Facebook campaigns.
With 845 million monthly active users, the social media giant said in its filing that it provides marketers and advertisers value in the form of access to user information such as age, location, gender and interests.
“We offer advertisers a unique combination of reach, relevance, social context and engagement to enhance the value of their ads,” the prospectus states. “Advertisers can specify that we show their ads to a subset of our users based on demographic factors and specific interests they have chosen to share with us on Facebook or by using the ‘like’ button around the Web.
“We allow advertisers to select relevant and appropriate audiences for their ads, ranging from millions of users in the case of global brands to hundreds of users in the case of smaller, local businesses.”
Facebook also said in the filing that “the recommendations of friends have a powerful influence on consumer interest and purchase decisions” and said it offers advertisers “the ability to use ‘social context’ with their marketing messages”.
But some commentators have joined WPP’s Sir Martin Sorrell who famously voiced his concerns when speculation of an IPO was first aired. He said: ““I have some fundamental doubts about the ability to monetise social platforms… it is dangerous territory if you try to over-monetise it.”
eMarketer’s principal analyst Debra Aho Williamson said: “Even though Facebook has spent several years wooing marketers, many of them still believe the ads are not effective at driving clicks and other actions.
“Facebook must either work to improve its clickthrough rate or show advertisers that advertising on the site is effective even without a click or other action,” she said.
