socialmediocrity

AllFacebook.com yesterday launched it’s monitor of Fan Pages on Facebook.

Of over 600k fan pages it tracks, less than 10% have more than 1,000 Fans.

Perhaps not surprisingly in the current climate, and of course recent events, is that Barack Obama’s Fan Page is the most popular, with over 4.5m fans. That’s still less than you might expect given his poll ratings, and given there’s around 45million US users on Facebook, but having been Mr President for less than a week, perhaps we should give him some time.

Facebook’s fan page comes in at a lowly 7th in the overall rankings, although we can probably take their 150 million users worlwide as eveidence that they are in fact more popular than that amongst Facebook users.

Food features heavily in the top fifteen, with Coca-Cola (2nd), Nutella (3rd), Pizza (4th), Chocolaaaaaaaaate (9th) and kinder surprise (10th).

Evidence also of Facebook’s growing popularity in non-english speaking territories. Anyone that’s ben using the ad platform to reach users anywhere other tan the US or UK can’t have failed to notice the rapid rise in users in some parts, and looking at the fastest growing pages this is also reflected. 12 out of the 15 fastest growing pages are written in languages other than English (UK) or English (US).

“Masturbation!” is amongst the fastest frowing English-language pages. I guess with all this online social networking to be done, people aren’t getting out so much.

The proliferation of self-serve ad platforms around social networks and pother web properties has brought advertising to the masses. Any and every small business, entrepeneur, start-up hopeful can reach the audience they want to without the rigmarole of finding a creative agency, or even just a bloke with Photoshop.

Ever since Google’s AdWords platform, advertising has become something of a DIY-ers dream.

And therein lies the problem. For all the good that feels like it brings, there is pain to be had, especially for the user. Take our first example, in a series that I suspect might run for many, and which sister-site www.micro-targeting.com has started exposing already.

Let's see. £30 in 10 mins. 60 mins in one hour...30....60....90 ...oh bllx, £500 an hour.

The title is enticing enough. £500 per hour? Well that’s £1,000 before lunch time, even for a late starter like me.

But hang on a minute. What’s the catch? In just 10 minutes I could earn £30. Woo Hoo! You can stick your job whe….hang on one cotton-picking minute.

FAIL.

…to be continued.

see also Advertising on Facebook just doesn’t add up

BREAKING NEWS. Those clever people at the Wheat Crunchies factory have embedded iPhone navigation technology into every packet.

With new figures showing Facebook overtaking MySpace in the US we’ve begun thinking again about Facebook’s ad revenue model. Of course a recession is always going to cause trouble and concern for ad revenue business models, but with a public platform available, we can begin to get a feel for their actual income.

According to Compete.com, the US user base has just exceeded MySpace’s for the first time, with 59.7 million unique visitors, versus MySpace’s 59.5 million. Google’s AdPlanner appears to show MySpace barely holding on to it’s lead, but it clearly won’t be long before they too will be proclaiming the beginning fo the end for MySpace too.

Of course there’s been constant speculation about the real value of the business ever since the Microsoft investment, which was rumoured to value it at a remarkable $15 billion. Leaked memo’s, emails, and recounted conversations since have reportedly shown that even some shareholders placed some more realistic valuations of $3-5 billion on it.

Heck, we’ve even had the valuation estimated on the Whopper Sacrifice application, placing a tongue-in-cheek $1.8 billion valuation on the community. Before Facebook banned it , of course. And not for the low valuation it appeared to place on the business either.

But whilst I might be over-simplifying things enormously, there’s enough information in the public domain to make an educated estimate.

Google AdPlanner tells us that, worldwide, and to the nearest billion, Facebook attracts 29 billion page views per month, and this is rising steadily.

We also know that, whilst it may vary from country to country and page to page, there are normally 2-3 ads on each page viewed on Facebook. Some pages have no ads on them at all.  So for the purposes of a non-scientific estimate it is probably safe to assume an average of 2.5 thoughout.

That gives us an ad inventory estimate of 72.5 billion ad impressions. every month. And rising.

Of course all the page views in the world (and let’s face it, they do seem to have most of them) are only valuable if you can secure advertising for them all, and at high enough rates. So where would we find out the rates Facebook are receiving for their inventory?

OK, no more rhetorical questions. Although the ad platform shows lower figures rates right now, they do vary, and of coruse much of the ads are not placed through the public platform, but in guaranteed delivery deals. What we can see is that at an average CPM rate of $0.50, if that is what they were achieving around the world on average, would give them ad revenues in 12 months of $435 million. Even if the user base continues to double every 12 months, the next year will generate approximately $630 million.

Of course if they’re not attracting those CPM rates, and let’s be clear that these are not the rates quoted at the time of writing for any markets on the public ad platform, then revenues will be significantly lower, and the same goes for the growth estimates. Sooner or later the rate of growth has to slow down, even for Facebook.

So with an ad revenue income estimate of $630 million, the valuation becomes clear once you determine whether you cup is half-full or half-empty. And of course which version of their costs you are prepared to believe. Alternative income streams should not be ignored entirely, siuch as sponsorship deals, and broader content deals, but with renewed prominence of the virtual gifts business that generates c. $40m per year income, Facebook could be generating $700m in 2009 if they get it right, the vast majority still coming from ad revenues.

Let’s assume costs of $250 million per year, leaving $450 earnings, then a $4.5 billion valuation would not be so obscene. $15 billion, even now, would be.

The key to moving forwards however will be in attracting advertisers, and finding ways to deliver excellent ROI for those clients in order to keep the ad dollars rolling in, at a time when advertisers are looking to reduce costs and slash marketing budgets.

Can advertising on Facebook standup to dominant low cost channels such as paid-for Search, and begin to make itself a regular feature on a marketer’s media plan? The smaller advertisers and marketers are making it work, but not until the larger worldwide agency groups find their way, and bring their clients to the party will Facebook see any great acceleration in it’s ad revenues, and until then their valuation will be debated and speculated over repeatedly.

In what looks like another hack, the socialmediocrity office was alerted to another mildly amusing copy change on the site. Accessing the Advertising platform, we notice that the “Advertising” label has been replaced with “Lying” in English (UK) language. It doesn’t appear to occur in any other languages at the moment.

Crazy People?

Of course, we can’t help being reminded of Dudley Moore in Crazy People when we see things like this. “Boxy, but good” anyone?

It’s beginning to look like these hacks are not being taken overly seriously, and whilst 99% of Facebook users will never see this particular hack, what if the “More ads” link on almost every page (beneath the other ads appearing on the page) is hacked to read “More lies”? In some respects it just goes to show that you should only give users so much control over the platform. Or perhaps open-sourcing translation isn’t such a good idea afterall. It does make me wonder what hacks are being undertaken in other languages around the world if this is able to occur so easily in the US to UK translation.

Either way we shouldn’t be overly surprised at the outcome. The vocal minorities always tend to be over-represented in any debate or democratic organisation, and so if you allow users to vote in hacks, then they will happen regularly as those with nothing better to do actively pursue the intended change.

It would be more concerning if this actually reflected broader user perception of advertising on the platform. Facebook have a series of guidlines to protect users against illegal and offensive advertising, but there is a steady stream of exceptions to this that we, amongst others, have talked about before: Guidelines but no rules.

Perhaps it is time for Facebook to take a harder line against the less principled advertisers, and were a bit stricter on itself when it comes to the ads it accepts. As a married man, I still receive many many ads promoting dating services, gambling products and the occasional get-rich-quick scheme – all of which contravene the otherwise largely well-thought-out guidelines (with the exception of Sex education. But only to adults), and it is the continuation of these largely irrelevant and low quality ads, coupled with no micro-targeting and no micro-messaging that generate poor perceptions amongst users, and subsequently low response rates from consumers, and therefore low value to advertisers.

Of course we’d poll the users to find out what they really thought of the advertising if we could still.

I’m convinced that most users would be more tolerant of ads if they were relevant to them and of a sufficient quality, rather than pay even a $5 monthly subscription to use the platform. But perhaps Facebook will consider an ad-free subscription model too, in the face of such low media rates being generated.