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"Koeppel Direct's media buying expertise has played an integral role in making my company successful. Koeppel generated so much business for our company, occasionally we have to limit their media buys, in order to handle all of the new business." | |
| - R. Gregg Marketer of Senior Products |
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MEDIA BUYING DIRECT RESPONSE TELEVISION (DRTV) ARTICLE ...... |
Why a College Drop Out Turned Down $1 Billion for Facebook
By: Peter Koeppel
Published: 10/07 ERA
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Facebook is a social networking website started in 2003 by Mark Zuckerberg, a 19 year
old Harvard college drop out. Facebook users post information about themselves on the site, such as photos and
events they plan to attend. They link their web pages with the web pages of other users that are "friends" and
thereby create a social network.
Facebook has 35 million active users, it has added 100,000 new registrations per day in 2007, it has an
incredible 3% weekly growth rate, it has 6 million active user groups and close to 31 million visitors in
July. Facebook is on track to reach $30 million in profit this year, according to the Wall Street Journal
8/23/07. The founder was supposedly offered $1 billion for the site and turned it down, according to an
article in NEWSWEEK on 8/27/07. Investors in the site hope to take the site public at a valuation of
$10 billion. In order to achieve this type of valuation, people familiar with Facebook say they are looking
to do something similar to what Google did with AdWords, which generated $10.6 billion in revenue last year,
according to the WSJ.
Facebook is not just for college students any more. More than half of Facebook's 35 million users aren't in
college. In 2005, it added high schools and in 2006 it added, "work networks." Facebook is also expanding
internationally and already is the top Web site in Canada and London is the geographic network with the most
Facebookers. Facebook has also been encouraging developers to create applications that allow them to make money
by running ads or selling products on Facebook. Facebook could use these applications to grab a share of eBay's
or iTunes' businesses with a Facebook version of those sites. (NEWSWEEK).
So how can marketers take advantage of the social phenomenon Facebook has created? Currently, advertisers can
target people on the site by age, gender and location of the user. Facebook is now developing a new, automated
advertising system that will allow marketers to target users based on a much more extensive database of personal
information that users report on the site. In 2008, Facebook will attempt to determine how receptive a person
might be to an ad based on the activities and interests of a user and its friends and target ads based on that
information, according to the WSJ.
It remains to be seen whether the addition of targeted advertising and an older universe of users will affect
the appeal of Facebook or whether Facebook will be able to grow to the size of Google. However, based on the
rapid growth of social networking sites such as Facebook and MySpace and the promise of being able to target
offers more precisely to consumers, marketers should consider testing out advertising on these sites to tap
into the potentially immense purchasing power of their members.
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