Facebook: The modern day direct marketers dream platform
Over the years Facebook has become a mega player in social media advertising. Each day over 800,000,000 people use the platform for what ever reasons they choose. And during the week that has just passed us by, it released its earning for Q1 2014. These are that it has made 1 billion dollars pre taxable income, while its earnings in terms of net cash inflow was $42,000,000. This is a lot of money indeed considering it is only one piece of software. In terms of its own growth it is huge because it means that Facebook has earned 3 times more this quarter than it has ever done before.
A few years back when they decided to take the company public, there were questions hanging over the company as to whether or not it would be able to monetize it’s huge user base into viable profits for public investors. It has definitely answered those questions positively and convincingly buried its doubters and haters too for that matter.
How did facebook manage to monetize so well?
Facebook was, at least on the surface looking in from afar, able to monetize through advertising. They have achieved this through countless hours of hard work trying to turn it into a legitimate advertising suite equipped with mobile application technology and everything that goes into effective online social media advertising. The two third ramp up of income over the last few years can be put down largely to the companies ability to get their act together on mobile and laptop platforms. Currently, these are the mediums through which over 60% of its income stream is flowing.
In essence, Facebook generates its profits through advertising. It has created a platform where businesses can market directly to potential customers who use facebook. The developers of the platform have been able to place ads strategically both in the banners and the news feed so as to not disrupt the user experience while getting products they may be interested in in front of their face. Further to this, the Facebook team have been able to write their algorithm in such a way that they can map and track users interests and match those up with appropriate ads they will most likely relate to and take an interest in. For this reason and others the company can be viewed as the first truly global and digital direct marketing platform.
Targeted advertising for laser effective results
Based on various demographic metrics FAcebook collects together with information from when you click on the like button, for instance, they can target ads to your feed very accurately. Such ads are more likely to convert into sales because at least they are feeding users with content they may actually be interested in.
The only other company out there that is able to offer the same kind of accuracy and effectiveness of advertising is Google. Together these two platforms have revolutionized marketing. Many companies are now pulling ads from TV and news papers and putting their resources for marketing straight into these two platforms.