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Hal Licino

How Facebook’s IPO May Signal the End of Advertising

Feb 06 2012, 02:34 PM by

When Bud Fox is confronting the greedy villain Gordon Gekko in Wall Street, he asks him the famous question: “How many yachts can you waterski behind?” This same question may also be applicable to the upcoming Facebook Initial Public Offering (IPO). Given that Facebook founder Mark Zuckerberg is facing a $1.5 billion (with a b!) income tax bill, which represents a mere pittance compared to his mega-billion net worth, the question that has to be asked in this case is “why even bother going public?” It seems that accumulating another warehouse full of $100 bills is only a side benefit to Facebook’s basic goal, which is to change the face of advertising… forever!
Zuckerberg Walks to Work
The notoriously skinflint Zuckerberg lives more like a recent college grad in his first junior management job than one of the world’s richest people. His clothes seem collected from the local Salvation Army Thrift Store, he lives in an unremarkable house, (and until recently was still renting), and gets around in an Acura TSX… which is owned by his girlfriend!

Companies generally launch IPOs in order to obtain access to capital, which Zuckerberg seems not to need as badly as a good haircut and a decent suit. With the stock market listing also comes a barrage of restrictions, regulations, reporting requirements and enough paperwork to keep a skyscraper full of attorneys busy around the clock. The almost irrational dedication to increasing the size and wealth of a corporation has resulted in the business landscape being littered with the corpses of the various Enrons, Lehman Brothers and WorldComs. However, the Facebook IPO could have some significant effects on the entire online marketing universe, as it seems that the social networking giant is headed in a direction that may determine the future of cyberadvertising.
Facebook Hits a 95% Ad-Serving Accuracy Rate
Facebook proffered ads to its legions of users that were worth $3.2 billion last year alone. These ads are served based on a proprietary algorithm that takes into consideration a user’s past behavior on the site, the types of content that they’re consuming, as well as the categories of information their friends are passing along. None of this is exactly new, as it is becoming common if somewhat creepy industry practice to datamine netizens’ every online action in order to provide specific ads that are deemed to be most relevant to them. Where Facebook is building the better mousetrap is in its accuracy rate. Its filtering and determination system achieves an accuracy rate that can hit 95%, as compared to the average industry figure of 72% for similar advertising delivery services.
Robert Irvine Only Drives Lexus
Where Facebook is breaking relatively new ground is in the integration of this personal data determination into the delivery not just of formal advertisements but in “ad products that are social, relevant, and well-integrated with other content on Facebook [that] can enhance the user experience while providing an attractive return.” Facebook/Zynga’s FarmVille game already features trees that grow Discover Cards, and many more of these instances are on the horizon. If this seems like a social media version of motion picture and television product placement, you’re not far from the mark. If you’ve ever wondered why entire episodes of Cougar Town seem to center around Dr. Pepper or why the Food Network’s Chef Robert Irvine tools around exclusively in a variety of Lexus vehicles, you’ve noticed how the lines between content and advertising have blurred to the point where it is now effectively indistinguishable where one ends and the other begins.
Product Promotions Inserted Seamlessly into Content
There has always been some element of built-in resistance to an ad, as it is generally viewed as an interruption to the consumption of entertainment content. If we’re reading an interesting magazine biographic article we have to flip through the full page ads hawking fast food, or if we’re watching a mystery movie on TV, the machinations of the villain are placed on hold while we’re pitched smartphones. The direction that Facebook seems to be forging with its “additional products for advertisers” such as Sponsored Stories could be called The End Of Advertising, triggering an era where ads as we know them no longer exist. In this future world of seamlessly integrated advertising exposure, the photos of the bio would feature the subject munching on a labeled burger, and the movie villain would hatch his evil plan on an iPhone with Siri serving as an accessory to the crime.

Posted in Social Media, Tech Editorial

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