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Facebook is sitting on a gold mine with the user data it is gathering, but can not effectively use this data yet. On the other hand, the millions of small websites in “the long tail” of the internet landscape can offer billions of ad impressions. If Facebook finds a way to connect their user-data with the ad space of the small websites, the online advertising landscape will face a massive advertising revolution.

Why Facebook Will Rule the (Advertising-) World

Facebook rules the worldAs a student we’ve always learned to keep it short, simple and stupid. I will try to do so in the following article.

I’m a publisher. My website runs only on advertising.

In the past I ran a web shop, which needed publicity.

I’ve seen both sides of the advertising chain and both sides have their difficulties.

What do I need as a publisher?

My main Goal: Companies who advertise on my website. Biggest problem: How to find these companies. Why do I have this problem? Because my website appeals to a strong differentiated market segment and therefore receives limited traffic (50’000 visits per month). I am in the “long tail” of business. But: This very exclusive market segment I target , is also my unique selling proposition.

What do I need as advertiser?

Main Goal: High conversion. Biggest Problem: How to find the websites, which can offer me the right target group (ergo: high conversion). Why do I have this problem? Because these websites are usually so small I cant find them, or the time it takes me to find them is too precious to me (too high opportunity costs). Also: there are so many websites out there and I don’t know which one works professionally.

How do publishers work?

As far as I know, every publisher – if big or small – has his own Facebook fan page. Why? 1. The Traffic – Facebook is the most effective and inexpensive marketing tool. 2. The Demografics – I get to know, which city my fans are from, what age they are, which friends they have, how much money they spend online, what they like and what they don’t like. Facebook knows everything.

How do advertisers work?

I give my money to an online advertising agency and hope they do a good job with it. Or, if I’m not a large company and do my advertising in-house, I will usually spread my advertising on Facebook, Google and maybe some banner ads. To advertise products in my shop Facebook reached the highest conversion rate (at least in my experience). Why is Facebook so effective? Because Facebook knows who would like to be my future customer.

Where does it all come together?

What is the biggest problem Facebook is confronted with? Facebook users see their account as their own property and therefore advertising on the own account is not welcomed by everyone. And: As soon as the user leaves Facebook, no more advertising can be sold to the user. Ergo: Facebook stands there with heaps of loads of user-data but can’t use it effectively.

Solution: The integration of Facebook-advertising on publisher websites. How? Facebook connect (or something similar).

How will it work? An advertiser buys advertising on Facebook. Thanks to the user data and advertising space given from the publisher to Facebook, Facebook will be able to show the best targeted advertising on a external website.

Who would profit?

Publisher: He would no longer have to go forth and look for buyers of advertising space (or at least not as much). He can boost his turnover significantly without having to do any additional work.

Facebook: With one big bang, Facebook would receive billions of additional advertising spaces. No longer would Facebook be limited to the small text ads but could also serve Rectangles, Skyscrapers, you name it. And best of all: No one would even notice that the ad would be served from Facebook. Facebook could use all of their precious user data to serve exactly the one ad, that suits the user best.

Advertiser: Since Facebook has exact user data, they exactly know what the user wants. This leads to online advertising that could not be any better targeted. Searching for publishers in “the long tail” would not be necessary any more and advertising would become more effective and less expensive. Conversion rate would take a big boost.

User: Even the user would profit. He would receive exactly the advertisement he wishes to see. E.g If the user is a fan of “vinegar chocolate” (And you can only find those kind of persons on Facebook), the producer of vinegar chocolate for the first time has the possibility to actually find this rear specie.

Conclusion

Facebook is sitting on a gold mine with the user data it is gathering, but can not effectively use this data yet. On the other hand, the millions of small websites in “the long tail” of the internet landscape can offer billions of ad impressions. If Facebook finds a way to connect their user-data with the ad space of the small websites, the online advertising landscape will face a massive advertising revolution.

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About Daniel Baur

Daniel Baur is a social media enthusiast. He holds a BA in Media- and Communication Science and an MA in European Business of the University of Fribourg. He is a passionate skier founder of several sports blogs and has recently discovered a wide interest in big data analysis.