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Matt O¶Brien

Erin Dietel-McLaughlin

FYC 13100

14 October 2010

What¶s Facebook¶s Influence on Advertising and is it Effective?

Today, a person can barely go a day without hearing something about the popular social

networking site Facebook. The reach of Facebook seems to have penetrated into the business

sector, particularly offering opportunities in the area of advertising. Facebook is new to the

game of Internet advertising but is looking to compete with traditional Internet advertising

powers like Google and Yahoo. There is great debate about the influence that Facebook has had

on Internet advertising and whether or not it¶s an effective alternative to other forms of

advertising. New research is showing the tremendous effect that Facebook is having on

advertising; it¶s becoming incredibly popular and changing the way in which other websites can

advertise. Facebook can provide a great medium in which corporations and entrepreneurs alike

can advertise and show their product off to the vast number of people that visit this site

everyday; it just has to be manipulated correctly so advertisers efficiently use their money to

appeal to an audience who will want to buy their product.

Advertising through social networking has been going on long before websites like

Facebook ever existed. The original medium through which social networking advertising was

done is through message boards. People looking to advertise over Facebook can learn a lesson

from those who used message boards to advertise. Gwen Moran wrote an article in

Entrepreneur , a magazine geared toward helping small businesses get their name out there,

which explained how to effectively advertise using message boards. Moran advocated appeals to



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thought leaders, who as described by Moran are ³credible experts, ranging from editors to

individuals with message board cred.´ He tells companies to ³pursue personal connections´ with

these thought leaders and get them to investigate your product. If they like it hopefully they will

plug it and write about it on the message boards (Moran). If these thought leaders give your

product positive reviews then it can gain huge exposure and you may acquire many potential

customers. This is a great way to advertise because customers really trust that these thought

leaders are unbiased and accurate in their analysis of quality products (Moran). The benefit to

advertising over message boards was that it was generally free. Although it took much time and

effort, it was a great way to get buzz out there about the products advertisers were trying to sell.

The first way in which advertisers are using Facebook for advertising is through the

application of Fan Pages. Fan Pages are essentially Facebook profiles for companies.

Companies have all their information on these pages and they can send updates out to their fans,

give information about their products, hold contests, and connect with the users of Facebook in

many different ways. These Fan Pages are becoming incredibly popular with large companies,

in many instances even trumping the companies¶ brand sites as the top way of advertising on the

Internet. Jack Neff, an editor for the magazine Advertising Age, believes that they have become

³the biggest relationship-marketing provider for many brands´ (Neff). In an article he outlays

how companies brand sites are severely declining in popularity as the Fan Pages gain popularity.

Neff notes that now many newspaper and TV ads direct consumers to look for more information

on Facebook Fan pages instead of the brand sites. Some large companies, like coca-cola and

Starbucks, have been able to acquire millions of fans on Facebook (Neff). Through the use of

Fan Pages, Facebook offers a free medium to advertise to millions of people. Essentially,



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company¶s brand sites are being replaced by these Facebook Fan pages and corporations better

job on board or risk losing a ton of potential advertising opportunities

Ironically, Facebook Fan Pages is actually quite similar to the original form of social

network advertising, message boards. Advertisers using Fan Page application for Facebook

should also apply many of the principles that Moran described for using message boards. As

thought leaders provided reviews for products on message boards, fans on Facebook can also

review products. Companies must appeal to their Facebook fans and offer them use of their

product to get positive reviews to boost the appeal and perceived quality of their product. Good

feedback on products from Facebook Fans can be just as beneficial as good feedback from a

thought leader on a message board. There are over 500 million users on Facebook and a large

number of them investigate these Fan Pages (Neff). If advertisers can take advantage of this

exposure and use it to get positive feedback for their products, then the quality of the product

will possibly be evident to millions of people. If used in the right way, by applying the

principles that Moran described for advertising over social networking, these Fan Pages can be a

great and free way to gain lots of exposure for companies and products.

The main appeal of the Facebook Fan Pages is that the advertising is free. While it may

take lots of time and effort to successfully use this medium of advertisement, no hard cash is

required to use it. Something that Neff pointed out though is that ³while fan pages may work a

lot like a marketer's traditional µowned media,¶ they're not actually owned by the marketers´

(Neff). So while Facebook Fan pages are a form of free advertisement presently, increased

dependence on them in conjunction with decline in the popularity of brand sites may provide

Facebook with a chance to make huge sums of money off these Fan pages. As Facebook

becomes a more popular place for advertisement they may want to eliminate free advertising.



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This would completely change the game of advertising using social media. One of the major

advantages of Facebook is that it offers potentially free advertising. The popularity of these free

Fan Pages is evident. They currently dominate company¶s brand sites in representation of the

company online. It¶s proven that these Facebook Fan pages are great at getting products and

companies exposure as millions of people view them. Critics try to knock the significance of

these Fan Pages by saying they won¶t be free forever and will become obsolete once they are no

longer free. Even if they do cost money that doesn¶t change their effectiveness. They will still

be a great way to advertise to the users of Facebook; the only difference is that they will cost the

advertisers some money. This just makes them even more significant in the present. Currently,

Fan Pages are a great potential way of advertising that must be jumped on quickly, as it is an

excellent way to gain exposure for a company and it may not be free in the future.

Free Fan Pages are not the only way in which advertisers have been embracing Facebook.

They also have the opportunity to pay for ad space on Facebook. Facebook has a section with

three advertisements at the right side of every page. These ads include space for a title, a small

picture, 135 characters, and a link to a website. In an article from the business magazine, INC,

editor Jason Del Rey acknowledges that some people look negatively at these ads because they

believe that ³it's not easy to make your ad stand out among the Facebook status updates, party

photos, and comments´ (Del Rey). Critics of Facebook advertising contend that its worthless to

spend your money on an ad that they believe will be lost amid everything else on the sites. Also

even if people do see your ad, there are so many people on Facebook that the majority of them

probably have no interest in the product. Facebook counters this problem though by allowing

advertisers to set a daily budget for advertising so they don¶t spend too much money and

allowing advertisers to choose to either only pay when people click on their ad or when people



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view their ad. Facebook goes beyond this though to help ensure that their advertisers can get the

best results possible. The audience the ad is shown to can be distinguished by where they live,

their age, their personal interests, and their relationship status. Facebook has all this information

available to them through its customer¶s profiles so it¶s easy for advertisers to target the

consumers they want to appeal to. Advertisers can easily tailor their ad to the specific

demographic that will be interested in buying it. This makes the influx of material and supposed

target audience issues on Facebook a non-factor when it comes to advertising. Facebook only

makes companies pay for ads that people click on and even better allows companies to advertise

to a specific demographic who will be interested in their product so they know that when people

click on their ad they will be interested in buying it.

Statistics have shown that Facebook can either be an incredibly effective place or an

incredibly ineffective place to advertise. CM Photograpics, a photography company based in

Minnesota, reported that $600 in Facebook advertising generating $40,000 in revenue and

StorQuest, a storage company in California, claimed that Facebook advertising led to over a 50%

increase in sales. These are not typical results though; some companies also have little success

with Facebook because they don¶t know how to advertise properly using it. In Jason Del Rey¶s

article he explains how to advertise properly over Facebook. The first key to effective

advertising over Facebook is appealing to the right audience. Del Rey explains that ³you can

choose to target people who are fans of your company's Facebook page or avoid your fans

altogether, if your goal is to broaden your pool of customers. You can also advertise only to

Facebook users who mention certain words in their profiles or status messages´ (Del Rey).

Facebook lets you appeal to a very specific audience; you must take advantage of this to

advertise effectively. It¶s also very important to test different types of Facebook ads according to



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Del Rey. Trying different types of payment methods and different types of ads will help you

discover what¶s best for you. Facebook lets you experiment with ads for very cheap. This will

allow you to test until you find the right ad. Perhaps the most important element of advertising

over Facebook in Del Rey¶s mind is ³making your ad pop.´ Edgy and risqué advertisements

seem to get the most attention so if you can¶t find a unique way to stand out among these other

ads, advertising over Facebook may not be very effective for you (Del Rey). Evidence shows

how effective Facebook advertising can be, but it doesn¶t work for everyone. You must utilize

proper method and test your ads in order to be successful using Facebook advertising.

The effect that Facebook is having on the Internet advertising industry has really

manifested itself through its appeal to teenagers. In an article from Brandweek, Elena Glowatz

reveals that retailers like JC Penney, OfficeMax, and Staples are relying heavily on Facebook as

a form of advertising because that¶s where they believe most of their target audience, teens, to

be. These companies see Facebook as a great way to appeal to teens and are now pouring large

sums of money into advertising over Facebook. Ruby Anik, VP of brand marketing for JC

Penny, proclaims that advertising using Facebook ³is not just a rising force in the teen market, it

is the force in the teen market." Other experts have different feelings though, believing that

whereas adults might be receptive to these advertisements, teens for the most part, find this to be

an intrusion and see the ads as interference into their daily lives (Glowatz). Still advertisers see

this as one of the most effective ways to reach the teen audience. They just have to walk the fine

line when using Facebook between appealing to teen customers and intruding on their lives.

Facebook¶s influence on Internet advertising extends far beyond the teen market though.

As mentioned earlier its Fan Pages application is already taking over company¶s brand sites as

their main form of representation. It¶s also effecting websites in other ways. The incredible



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popularity of Facebook in adverting is causing online-ad prices for other websites to sink. Ellie

Sawits, CEO of a New York City-based company that sells chocolate candies used to treat acne,

believes that ads on Facebook are an affordable alternative to the high pay-per-click rates on

websites like Google. Ellie says, ³For me, the economics of Google just don't work.´ Not only

does pricing favor Facebook, but also because so many people are visiting Facebook every day

advertisers know their product has a chance of getting lots of exposure. Everyone knows their

ads will be seen on these sites and thus there is great demand. The cheap prices and high

visibility of the ads is causing great demand for Facebook ads. Great demand on Facebook

means less demand on other websites; therefore, these sites are being forced to drop their prices

in order to compete with Facebook. It¶s been estimated that the average online advertising prices

have dropped by 18% since last year (Lee). This 18% drop is in conjunction with an incredible

192% increase in promotion done for companies over Facebook since Spring 2008 (Gaudin).

Most people believe this drop in advertising prices and increase in promotional Facebook use to

be due to the dominance Facebook has been holding over the rest of the market with cheap prices

and high exposure. The influence Facebook¶s popularity is having on other websites is certainly

undeniable.

Keith Lorizio, head of US sales for Microsoft, reinforces the Facebook¶s influence by

explaining that Facebook is ³going to be a challenge for everybody, as the sheer dominance of

the impressions [it¶s] making floods the marketplace with inventory.´ The point he¶s making is

that Facebook is changing the game of advertising over the Internet. Its influence on society is

so strong that it has become an incredibly popular destination for advertising. This means that

other websites are going to have to find ways to stay relevant despite the stranglehold that

Facebook seems to be taking on Internet advertising.



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Facebook¶s popularity expands too as the uses of social networking now extend beyond

just company¶s use. Richard Waters, a professor at N.C. State University, has been running

studies to see how non-profit organizations are using Facebook. While just beginning to use

Facebook, non-profit organizations have been quick to adopt Facebook as a tool to ³engage their

stakeholders and foster relationship growth´ (Waters). Creating a Fan Page is a free way to raise

awareness for a cause and a chance to appeal to the millions of people that use Facebook daily.

In a troubled economy, job seekers have also looked toward social networking for help. Social

Networks aren¶t just something to be used by companies to advertise their products to people; it

also can be used for people to advertise themselves to these same companies (Kramer).

Facebook¶s popularity, relevance, and influence on advertising just continue to rise as people

find more and more ways to exploit it for their own purposes. Because Facebook is so popular

everyone wants to find a way to use it; if you know how to use Facebook you can have access to

millions of people as your audience.

It¶s very clear that Facebook has a very profound effect on Internet advertising. Its

influence is tearing down traditional brand sites and causing problems for traditional advertising

powers like Google. Websites have been forced to change the way they do advertising based on

Facebook¶s influence. The only way Facebook could have such an influence on Internet

advertising is if it¶s an effective way to advertise. If companies couldn¶t successfully advertise

over Facebook, it would be rendered obsolete as far as advertising goes. But companies have had

great success using Facebook and that¶s why it¶s becoming so popular and has such great

influence. To use Facebook to advertise though, the advertiser must know how to manipulate it

so they can appeal to the demographic they want to advertise to and they must also take

advantage of Facebook¶s cost effective strategies to test which type of ad will work best. When



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used properly Facebook is an essential tool to advertising, but if used incorrectly these ads can be

seen as intrusions and can be lost among all the mass media on Facebook. Still, Facebook has

proven it can be an effective alternative to other forms of advertising. What¶s interesting is that

Facebook advertising is just in its fledgling stages and it¶s already such a force in the advertising

market. One can only wonder how strong it will grow over time.



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Works Cited Del Rey, Jason. ³Fishing For Friends.´ INC. Mansueto Ventures LLC. New York, New

York. October 20 2010. Web.

Gaudin, Sharon. ³Business Use of Twitter, Facebook Exploding.´ Macworld. Mac

Publishing LLC. San Francisco, CA. 23 October 2010. Web.

Glowatz, Elana. ³Call it Back to School 2.0.´ Brandweek. Nielsen Business Media, Inc.

New York, New York. 20 October 2010. 7. Web.

Kramer, Marc. Power N et working . Lincolnwood, Ill: U.S.A NTC Contemporary, 2008.

Print.

Lee, Edmund. ³Social Networks Sink Online-ad Prices.´ Advertising Age. Crain

Communications Inc. Detroit, MI. 21 October 2010. Web.

Moran, Gwen. ³Under the Influence.´ Entrepreneur. Entrepreneur.com, Inc. Irvine, CA.

20 October 2010. 30. Web.

Neff, Jack. ³What Happens When Facebook Trumps Your Brand Site?´ Advertising

Age. Crain Communications Inc. Detroit, MI. 20 October 2010. Web.

Waters, Richard. ³How Nonprofit Organizations Are Using Facebook.´ Public Relations

Review. Elsevier Inc. Philadelphia, PA. 23 October 2010. Web.

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O'Brien,Matt RES