Photo: Kimberly White / Getty Images
We just learned some data that makes it easier to believe that $75 billion valuation Facebook is supposed to have when its shares finally start trading in May.The people over at Ticketmaster have put together this cool product where, when a customer buys a ticket to a concert online, that customer is given the option to share the news with their friends on Facebook.
What the customer actually shares is a link to a seating map of the venue, labelled with where he or she will be sitting. The customer also has the option to label the places on the map with the names of other people they just bought tickets for. This is just like “tagging” a photo on Facebook, and it makes it so the news is also shared with the friends of the people who are tagged.
You can see how this feature is useful for everyone.
Customers only share the information if they want to, and if they want to it’s probably because they want other people to come to the concert with them.
If you’re friends with one of these people and you see that they are going to a concert, it’s at the very least an interesting bit of social news and at best a good way to learn about a concert you might also want to go to.
Here’s the good news for Facebook: It turns out that every time a Facebook user sees one of these links shared by their friends and clicks on it, that click is worth $6 to $8 in sales for Ticketmaster — $6 if the customer only shared information about themselves, $8 if they labelled the seat map with their friends’ names.
The truly stunning thing is that clicks from Google search results and ads are worth the same amount — $6 to $8 in sales.
That’s remarkable because traffic from Google is solely made up of people who already knew they wanted to go to a concert and were already looking for information about it. People coming to Ticketmaster through the Facebook links are more likely to be people who didn’t know they wanted to go to a concert before they saw the shared link on Facebook.
Advertising that connects people with something they already know they want to buy is valuable. That’s what Google sells. Advertising that finds people who didn’t know they wanted to buy something, and converts at the same high rate as advertising meant for people who already know they want the product is much more valuable. Instead of satisfying demand, it actually creates it.
Here’s the catch for Facebook: Ticketmaster isn’t paying Facebook a dime for all this good traffic. This is for two reasons. One is that Ticketmaster hasn’t ever spent much on marketing itself. It’s just a platform concert promoters can use to sell tickets. Concert promoters are the ones who spend on marketing. The second reason is that those links aren’t ads that Ticketmaster has to pay for. Ticketmaster is, basically, just a well-conceived app on the Facebook platform.
The good news for Facebook (and future Facebook shareholders) is this: Ticketmaster executives are working very hard to convince the concert promoters they work with to stop spending for ads on billboards and radio spots and start spending money on Facebook. Ticketmaster execs are telling concert promoters to buy Facebook ads that turn those shared links into “sponsored stories.” Basically all these ads do is take something a normal user did or said on Facebook and promote it to a more visible place for a longer period of time.
Importantly, TicketMaster exec Kip Levin says that clients have not all yet caught on to this new form of advertising. Big picture, this means that there is a whole industry’s worth of marketing dollars for Facebook to add to its advertising revenues.
The even bigger picture is this: If an industry can figure out a way to build Facebook into its products in a way that is actually useful for its customers, that industry will benefit and so will Facebook. Basically, it makes it much easier to believe that Facebook is worth $75 billion right now, and could be worth much more in the future.
Want to here more about what Kip Levin and Ticketmaster are doing with Facebook? We’re going to grill him on the topic at our Social Commerce Summit on Tuesday. You should come!