Photo: Helga Weber / Flickr, CC
Facebook’s management has recently adopted a new mantra: that Facebook’s audience is the equivalent of three Super Bowls every day. COO Sheryl Sandberg said it on the Q3 2012 earnings call. And vp/global marketing solutions Carolyn Everson said it at our Ignition 2012 conference in New York recently.It turns out that this mantra is a clue to how Facebook intends to start stealing the advertising dollars that currently go to television. Facebook has made three recent moves that all point to an attack on the ad dollars that previously went to TV:
- Facebook is now the second biggest server of online video, behind YouTube. Although Facebook is a distant second to YouTube, that’s still huge progress. Facebook now shows more video than Yahoo!, Vevo, Microsoft, AOL and everyone else.
- Facebook has a partnership with Nielsen, to develop “Nielsen Online Campaign Ratings” (OCR), which measure the audience for Facebook ad campaigns in a similar way to how Nielsen measures TV audiences, by reach and frequency. The result is that it is now a lot easier for big advertisers to compare their TV ROI with their Facebook ROI.
- Facebook has a partnership with Datalogix, a consumer data company. It allows advertisers — particularly big packaged goods companies like Procter & Gamble and Unilever — to target their own customers with ads inside Facebook, and to compare those campaigns against control groups that did not see them, and thus calculate exactly how many sales any Facebook campaign created.
Put this altogether — along with the notion that Facebook is bigger than the Super Bowl, TV’s ne plus ultra of audiences — and it appears that Facebook sees TV’s old media dollars as ripe for the picking.
- SEE ALSO: The 6 economic factors that prove Facebook will go to war against TV.
Photo: Lucy Jacobs / Spruce Media
“Facebook is 100 per cent primed to take down those TV budgets,” according to Lucy Jacobs, COO of Spruce Media, which handles about $150 million in Facebook ad buying annually, from advertisers like Samsung and P&G. The Nielsen aspect allows Facebook campaigns to be measured with “gross ratings points,” which are a measure of the reach and frequency of a campaign as a seen by the target consumers. “They are building a case for moving TV dollars to Facebook as they help brands quantify how Facebook reach and frequency maps to GRP’s,” Jacobs tells us.She notes, of course, that this is not going to happen overnight. It’s still really “easy” for advertisers to continue buying TV: The infrastructure and the habits have been in place for years and will not easily be dismantled.
But it could happen, if Facebook gets its way.
Likewise, Rob Leathern, CEO of Optimal, a social media analytics company, says “I think they’d love that to happen.” Again, like Jacobs, he’s careful to note that the shift of dollars from TV to Facebook would be a long-term event. But, he says, “They’re definitely going to be doing more video stuff next year. … there’s a lot of evidence to suggest that’s gonna be shifting and allowing people to do more interruptive advertising, rather than just the [display ads] on the right hand side. Obviously, TV is the original interruptive medium.”
Photo: Rob Leathern
Facebook has no choice: It needs video to prosper.Facebook is actually under some pressure to build a big, robust video offering to fend off international competition. In Russia, Facebook has only 7 million members. The big domestic social network there is VKontakte, which is a rip-off of Facebook. It has 40 million members. The reason it’s popular is because it allows the free streaming of pirated movies. Many, many Russians spend their evenings logging in to a watch a movie (illegally) — free of charge.
Of course, Facebook, can’t offer illegally copied movies. But it can do what Google’s YouTube has done — offer a huge amount of rights-managed video for free. Online video watching is already eating into TV ratings and ad dollars.
This is where it gets really interesting: The main difference between Facebook video and YouTube is that Facebook’s audience is logged-in while it watches, and Facebook can let advertisers target viewers using all its available data on each user. On YouTube, by contrast, a huge chunk of the audience watches anonymously because you do not need to sign-in to see the content.
Facebook video is, therefore, the kind of dream situation that the television business can never hope to match. The only question is, can CEO Mark Zuckerberg build it?
Disclosure: The author owns Facebook stock.
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