Facebook is the biggest social network today. Some would argue that it’s probably also the catalyst that made social networks as popular as they are today. Over the years Facebook has grown and changed a lot and has seen its share of controversies. In this article, we’ll look at how Facebook started out, how it helped evolve the digital marketing landscape and some of the controversies and implications its had recently.
Similar to the Instagram blog post, I’ll start this article off by taking a trip down memory lane.
Facebook was founded by the famous Mark Zuckerberg and his roommates in February 2004. Initially, it was only open to Harvard college students. It was actually called “Facemash” and released in 2003.
But since then Facebook has opened its doors to pretty much everyone. Since 2006 anyone that is over the age of 13 can register to become a user of the social network as long as they have a valid email address. Even in those early days, the social network was reliant on advertising for its revenue, a business model that it has more or less kept till today. However, it took a while for businesses to warm up to Facebook. For those of you old enough, you might remember the days when businesses that had a Facebook page were extremely trendy! In late 2007 Facebook only had 100,000 business pages (which is not a lot compared to the over 50 million business pages the network boasts today).
In October 2007 Microsoft purchased 1.6% of Facebooks shares, including the rights for international advertisement. Following this Facebook moved its international headquarters to Dublin and by 2009 reported its first positive cash flow as well as being officially named the largest social network in terms of monthly active users.
On an unrelated note, it was also blocked by China that year.
The social network received a steady stream of growth and traffic, with Second Market valuing it at $41 billion in November 2010. So appropriately, it was time to move on to bigger and better things in Silicon Valley, which is exactly what Facebook did in early 2011 when it moved into Sun Microsystems old headquarters. The same year the company was also named the second most visited website in the US behind Google. Pretty impressive.
The following year Facebook filed for its IPO, negotiating a share price of $38/share and was valued at $104 billion (damn). Facebook also netted an income of $5. Billion that year and joined the Fortune 500. All-in-all a pretty good year, right? Well, it would have been, but the glorious IPO seemed to be a bit shadier than first believed. I’m not going to go into detail in this blog since it’s a bit off topic, but suffice it to say that projected earnings were manipulated for certain investors, which bloated share prices. Consequently, Facebook had to file a class action lawsuit. That, in turn, lead to Facebooks stock losing almost a quarter of it’s starting value.
On the plus side, Facebook did get its one billionth user in October that year! Hurray!
Fast-forward a bit to 2015. The US elections are around the corner and there is a lot of flare around ‘Fake News’, a controversy that Facebook (and other social networks) seemed to have found themselves in the middle of. This was especially true for the Trump campaign and if you fast forward again, the recent Facebook Analytica scandal. If you want to read more about that check out our GDPR article.
So let’s talk about marketing! Yay!
Social media has become a marketing channel in its own right. Some would even go so far as to say it’s the biggest aspect of digital marketing. While Facebook set out to be a “social” network, over the years it has attracted a lot of businesses (50 million pages as mentioned earlier) and actually relies on businesses promoting/advertising on the platform for revenue.
Types of ads
As of the first quarter of 2018 Facebook has roughly 6 million active advertisers on its platform
This makes it one of the largest advertising platform in the world. Advertising on Facebook also gave birth to various new types of adverts. The digital format obviously made it possible for businesses to utilize video and picture formats, however, the interactive nature of the social network also allows for more innovative adverts such as collections (mainly used by B2C businesses) that allows you to directly advertise a product that is part of your collection.
There are also the slideshow, carousel and canvas formats which offer more creative and immersive way to draw in consumers and tell a product story.
On the other hand, there are also simplistic ways of advertising such as advertising a discount or simply boosting a post to generate more engagement.
Social media advertising on Facebook has given brand awareness and a lot more emphasis. Things such as brand reach can be quantified into numbers, which was not possible before.
The nature of social media marketing also has the advantage of having access to users information to create a digital footprint that can be an indicator for certain interests. For example, there is a likelihood that someone that liked the first 6 Beyoncé albums will also like her seventh album (if she makes a seventh album that is).
From this information, Facebook can the create something called lookalike audiences. These can compare the various interests that users have in order to give predictions of things they might also enjoy. This can be very helpful if you already have a list of customers but want to expand your reach. For instance, if you are trying to market a perfume (and lucky for you Beyoncé decided to model for it), chances are that Beyoncé fans will be interested in it. So you can, therefore, target audiences that have an interest in Beyoncé.
Reduced organic reach
Recently Facebook has changed its News Feed algorithm which had large impacts on the organic growth of business pages. This was a controversial change that many businesses were not pleased about. The idea is to make the platform more enjoyable for users while also maintaining profitability from adverts. This was achieved by prioritizing a users’ friends’ posts over company page posts.
While at first, it might not make sense to inhibit the organic reach of businesses, a second look, reveals that it actually does! It has been a general consensus that the Facebook News Feed had too much content from company pages. While companies enjoyed this those that used Facebook purely from a consumer viewpoint, not seeing the (“meaningful”) updates could be frustrating. If users are frustrated for long enough they will cease to use the service which in turn would make advertising meaningless. This might be a very black-and-white approach to the situation, but it makes sense.
The recent Cambridge Analytica scandal has encouraged many users to become more conscious of what data they choose to share with Facebooks and what apps they allow to access their Facebook information. While it certainly doesn’t mean that social media marketing will be unviable in the future it does suggest a diversification in the digital marketing landscape.
Facebook being the largest social network means that any controversies that surround social media, will impact it the hardest. It also means that it is likely to facilitate big changes across social media platforms or bring popular features into the mainstream (such as the implementation of stories to Instagram).
However, large-scale scandals such as the Cambridge Analytics case can result in long-lasting criticism (just googling social media will yield hundreds of posts that explain to you exactly how depressing and undemocratic social media apparently is). Consumer awareness of the negative impacts of data collection and social media addiction has risen over the years, so it is only natural that eventually alternatives will be sought out. In order to keep up with this trend, Facebook needs to, as it is doing, diversify its approach by innovating in the various emerging technologies such as AI, AR, and VR, in order to remain relevant. Facebook has also taken various steps to improve the visibility of the data that consumers choose to share with third parties. This came in form of the privacy shortcuts option added on top of the newsfeed.
Having said that, it is also important to emphasize that Facebook still remains one of the largest advertising platforms in the world and continues to be an efficient way to target audiences. The platform continues to boast one of the largest databases and markets for advertising.