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P&G Joins Herd Of Huge Advertisers Stampeding To Facebook
Today comes news (via SAI) that Procter & Gamble is taking the plunge.
"Procter & Gamble Co. loves Facebook after all, and besides encouraging brands to develop a presence there, the world's biggest marketer has opened an office in Silicon Valley to help develop social-networking systems and digital-marketing capabilities with the website.
Those messages came in a meeting last week between P&G executives and venture capitalists, recounted by David Hornik on VentureBlog in a post that quickly picked up currency over the weekend on, of all places, Twitter.
"P&G's explicit goal for 2010 is to assure that each of its brands has a meaningful presence on Facebook, and they are willing to pay dearly for that," Mr. Hornik wrote. "And while P&G's thought leaders expressed some skepticism about the efficacy of Facebook's 'engagement ads,' they certainly view Facebook as a must-have for digital advertising and brand building. They didn't quantify what they are paying for that exposure, but it is quite clear that the numbers are very big."
Our Take: Facebook is moving in the right direction getting more large brands on board, and premium brand advertising should emerge as a major, fast-growing revenue stream. It's still a relatively small business for Facebook, though. Currently we estimate that premium inventory sold as part of branding campaigns account for only 10% to 15% of the company's total ad revenue ($100-$150 million run-rate), with low-CPM self-serve inventory making up most of the rest.
Neither Facebook nor Procter & Gamble told AdAge how much they were spending or the rate they are paying. However, we have learned that brand ad buys currently range anywhere from $50,000 to $500,000 and typically pay a $10 CPM.
P&G, like other big brand advertisers we speak with, are viewing Facebook as a must-buy this year. This is a big change from a year ago when social networks had difficulty getting large brand advertisers meaningfully onboard at premium rates. The change is because Facebook, unlike other social networks, has become ubiquitous in people's daily lives and has grown a highly engaged audience that rivals the size of major portals like Yahoo.
Brands and agencies are slow to adopt new technologies and ad platforms, never mind new measures of ROI (many are adjusting to new "engagement" metrics that have become popular). Analysts have been looking for branding dollars to flow into the Internet for nearly a decade now and we have just started to see them flow meaningfully into the medium the past few years.
But if Facebook continues to generate solid ROI for its advertisers, we believe more brand advertisers will spend meaningfully on the platform. But it could take some time for this to become a majority of the company's revenue.
See Also:
ANALYZING FACEBOOK'S BRAND ADS: Solid Prices And ROI, Big Advertisers Like Coke Ponying Up
Facebook Self-Serve Ad Pricing Is Extremely Low -- This May Not Be A Huge Business After All
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