Photo: Spencer E Holtaway
The valuation for Facebook continues to climb higher as the company strengthens its stronghold on the social networking space. With over 500 million users and an IPO probably coming in 2012, it is time for the Facebook team to focus more attention on its monetization efforts. It would behoove Facebook to utilise its leverage as a dominant Internet force to develop and grow out a PPC syndication network.If there is one company that understands monetization on the Web it would of course be Google. In addition to Google’s success with signing up companies to advertise directly on Google.com, Google has made a fortune through its PPC syndication network. Google had tons of advertisers, great technology, boatloads of capital, and a brilliant team; and it was able to figure out a way to become a middle man between online advertisers and Web publishers. The results of Google’s PPC syndication network have been outstanding – as small, medium, and large Web publishers continue to plaster Google Adsense above and below their content.
An increasingly concerning problem for Web publishers is that there is no real competitor to Adsense. Yahoo was positioned to build a product but they failed miserably and had to essentially outsource their program to Chitika. Many Web publishers have hoped that Microsoft would roll out a viable PPC syndication network but that waiting game has been going on for about 10 years now. Other large search engines such as Ask.com and AOL aren’t focused on building out a syndication network as they are actually displaying Google ads themselves. And even though Google continues to treat and pay its publishers well via the Adsense channel, it can be a scary time when there is only one player in town.
Facebook is well positioned to build a successful PPC syndication network and it should capitalise on it right now. First and foremost, Facebook has quietly cultivated hundreds of thousands of publisher relationships. The Like buttons that we see on most websites today come directly from code given to Web publishers on Facebook’s site. And while these like buttons merely help the publisher to get users to promote their content, the relationship that Facebook has started would be essential if Facebook launches a PPC syndication network.
If Facebook got its ads onto just one third of the websites which are already publishing the Like button – the Facebook syndication network would become a viable alternative to Google Adsense over night. After all, in April of 2010, when Facebook launched the Like button, it received well over 1 billion impressions within the first 24 hours of its launch.
To succeed with a syndication network you need a large pool of advertisers so that you can display a relevant advertiser to the user. With more time being spent on Facebook than any other Website – Facebook is positioned to grow its ad network big enough to be able to target relevant ads across the entire Web. Other ad networks don’t own enough traffic to be able to grow an advertiser base large enough – this has been a primary reason why Google has been the only player in town for so long.
Facebook continues to sign up new advertisers and retain existing advertisers who want to promote their product, service, or Facebook fan page on Facebook.com. Many of these advertisers would be willing to opt-in to have their ad displayed on targeted Websites across the Web. Plus, the Facebook advertisements always include a relevant picture so these ads could respond well on the publisher’s Website because they would be catchy.
Once you have the base of advertisers and publishers, you need to develop technology that can properly target an ad to the user based on some criteria. Potentially, Facebook could target the ad based on the users interest because the user could already be logged into Facebook when they are on a given publishers site. Yahoo’s biggest problem was targeting, they had a huge base of advertisers as a result of their Overture acquisition, but they never could develop a robust technology which would properly target relevant advertisers on a given Web page. Facebook has the technology, leadership, and experience to be able to identify a targeting strategy that will work.
Another key to building out a syndication network is the ability for the network to track click fraud. Fortunately for Facebook, a lot of its advertisers promote their Facebook fan page. As a result of this, Facebook will be able to see how many clicks result in someone liking the respective Fan page of the advertiser. This will give Facebook a unique window into the effectiveness of a given ad on a Publisher’s Website. This ultimately could help Facebook to identify which publishers were participating in click fraud which would ultimately protect the advertisers on their network.
When you combine Facebook’s war chest, publisher and advertiser relationships, brilliant staff, and knowledge of individual user behaviour – Facebook’s syndication network would be destined to be a success. Because of its financial situation, Facebook could share the vast majority of the revenue with the publisher as a way to build scale and make an impact within the syndication space.
Facebook can have all of the traffic in the world – but for it to be compared to Google – it needs continue to innovate and make moves on the monetization front. And the Web publishing community would applaud and be excited about a legitimate Adsense competitor.