Founded in 2004, Facebook now has about 600 million active users and is worth an estimated $50 billion.  It’s a free service, but all that money is coming from somewhere.  So what’s the secret to Facebook’s success?

We are.  Facebook is an advertising goldmine.  Using the data Facebook users so freely provide, advertisers can segment and target specific populations, advertising more and effectively.  Facebook is by no means ad-free, but the site’s inherent ability to segment its audience allows an advertiser to gain penetration.

Take a look at Facebook through my eyes.  Are the ads for jewelry, expensive cars or makeup? No.  Advertisers know that as a male college student, I’m probably not going to be buying those types of products.  But what types of products or services would be relevant to me?

Honestly, when I logged onto Facebook to look at ads, I did not expect them to be so perfectly pertinent in my life.  Well, they are.   The ads I immediately saw were for EA games, Smirnoff vodka, disc golf, and a Groupon for Columbia.

Check out the ads on the bottom right - EA Games, Smirnoff, Disc Golf, and Groupon.

Were all of the ads appropriate?  Yup.  The EA Games ad was certainly well targeted.  I’m a big gamer, and I own an Xbox 360 and plenty of EA Games’ products.  I’m a 21-year-old college student, so I would say a Smirnoff add is very appropriate.  A disc golf advertisement would not likely receive much of attention on Facebook, but as a frequenter of the sport, the ad intrigued me.  The Columbia Groupon ad was also pertinent.  I attend the University of Missouri and consequently spend at least 75% of my year in Columbia.  Why not save money while I’m there?

Even though it seems like common sense that advertisers would want to specifically target who they reach, I am still impressed with the pertinence of Facebook’s advertisements.

In my opinion, the most important lesson to take from Facebook’s advertising model is to step away from mass marketing and towards specific segmentation and targeting.  When the potential consumers are only seeing ads for products or services they will actually use, advertisements will bring a much larger return on investment.  A well-positioned product that’s marketed to the right population will be very successful.  The Internet is an amazing way to find those people who will care the most about the message you’re delivering.  Instead of spending valuable time and resources attempting to reach everyone, focus those resources towards finding the exact population that will respond to your advertisements.

Have any questions for me?

Alex Schupp - (314) 435-5720 - twitter.com/schuppaloop - facebook.com/aschupp - aschupp@schuppco.com

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