If Facebook wants to justify that rumoured $100 billion rumoured IPO valuation, it’s going to have to build a huge advertising business.
Right now Facebook makes money from ads because it’s so huge that marketers have to buy its ads, but it hasn’t yet “cracked the code” on a format of advertising that’s innovative and hugely profitable the way search ads ended up being for Google.
However a report just out from comScore on how people use Facebook suggests that there’s truth to the hype. The big promise of marketing on Facebook is that a marketing message won’t just hit one person, but their friends as well. It’s that multiplier effect that gets marketers’ mouth salivating.
Is that multiplier effect real?
The jury’s in and the answer is: yes.
To assess that, comScore looked at the fan pages of three big brands–Starbucks, Southwest and Bing–and how being a fan or, more importantly, a friend of a fan, behaves compared to a random internet user.
First of all, the potential of the multiplier effect is big: while Bing has 1.7 million fans, it has 232 million friends of fans, a huge potential audience.
Messages on Facebook can spread from friend to friend. If my friend is a fan of Bing, he might like one of their updates and I might see it in my news feed.
And yes, that provides marketing benefits. Friends of fans do visit brand sites much more often than the average internet user:
This chart of how much friends of fans of Southwest visited speaks volumes:
But it’s not enough for people to just visit your site. Do they use your product more? For Bing, the answer is yes, friends of fans search more on Bing:
What does that all mean for marketers and Facebook?
For marketers it means that the promise of social media marketing–messages spreading from your targets to their friends through their social graph–is real, at least for these brands on Facebook.
For Facebook, it means that there’s money here. An active presence on Facebook provides real benefits to brands, and so that’s something they’ll value. They’ll spend more on Facebook ads to get more fans on their pages, because then their messages will spread not just to fan but to friends of fans. This means more money for Facebook.
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