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Facebook Monetization Part I: How Companies use Facebook Fan Pages

So in my previous post Mushon had commented that another question warrants some investigation is “While we know what incentive the user has for clicking on an ad relevant to their search query, how is/can social media creating a context that supports the advertiser’s messege and might effect consumer habits?” This is where social media triumphs over traditional online media such as search or display (it feels odd saying digital advertising is traditional, but I guess it has become traditional compared to newer media such as Social or Mobile). Facebook is essentially creating a mini-portal for companies through fan pages. Fan pages have become an essential part of company’s presence on-line and connecting with its consumers. In March 2009, Samir Balwani wrote an insightful post on Mashable explaining what an effective Facebook fan page involves.

According to Balwani, first and foremost, a fan page by definition and purpose provides a network with other platforms. Below are two examples, from the original post that show this synergy.


VS Pink Facebook Fan Page

The first picture is the Victoria’s Secret Pink homepage. This is a company-owned, controlled environment. However, you can see that there are abundant “re-directs” to Myspace or Facebook. The second picture is the image of Victoria’s Secret Pink Facebook fan page. Fan page contains direct video advertisement and elements that users might find interesting. It is still controlled environment, but it allows for users for interact with the brand and the company. Yet still, they do not hold the control or can change the fan page directly. It is a perceived control and perceived interaction. But it is an amazingly effective way to lead potential consumers down the marketing funnel and more engaged on the brand.

In addition Balwani explores how Facebook fan page can be used to more effectively conduct promotions and target wanted audience. Below is an image showing an example of Facebook coupon offers and store location finder for Sears:

Facebook Coupons

As you might imagine, this is much much much more cheaper and easier to conduct than print couponing. It also gives the companies more control. If they think too many coupons are being used, they can easily change the discount rate or even take the coupon down whenever necessary. Also, by being able to track where these coupons are being downloaded and used, they can more efficiently evaluate their market positions and strategy. Moreover, by knowing that people who come on your fan page are already more refined than the general audience, you know that you are reaching a more targeted audience. This becomes even more important for companies focused on younger population. For instance, Victoria’s Secret Pink mentioned above MUST utilize this since their target audience are all over Facebook.

Finally, Facebook fan pages provide a valuable channel to measure “buzz” around the brand. For years, buzz has been an essential element of marketing and advertising, yet it was always dismissed to a certain extent as unmeasurable marketing-speak. However, on the digital spectrum, measuring buzz and moreover measuring the value of buzz is becoming a reality. In fact, the General Sentiment recently shared “value of buzz” for major companies.

Facebook fan page is only one way in which companies utilize Facebook for marketing/advertising and only one way in which Facebook could generate money. I am not sure if Facebook charges companies for fan pages, but even if they don’t they should be making large chunks of money from click-through on coupons and ads on the fan pages already. In the near future, I believe Facebook could utilize fan pages to more effectively measure “buzz” themselves to provide individualized reports and consulting for companies (similar to Google for SEM/SEO). Or Facebook could earn money by adding security elements to the fan page and having companies pay for them. Facebook could use fan pages as direct e-commerce channel, which would be absolutely HUGE in terms of revenue opportunity. Whichever way Facebook decides to proceed, fan pages by itself shows a significant potential, if not already existing opportunities, in which Facebook generates money.

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3 Comments

  1. nadine 12:08, Feb 9th, 10

    Hi Dan, this is a really interesting topic! I am looking forward to your next post! I’ve checked my facebook page to have a look at some sponsored fan-pages (would be interesting to know how much a company has to pay for such a page). The Coca-Cola fan-page has 4,954,015 fans!! Not only is it a incredibly easy way to put your brand name out in the network, but you also have them in a sort of “mailing list”- so you could send them further info. You could even book a flight for the Swiss airline! Would be interesting to compare the hits of a brands normal homepage, and the number of members on facebook. Another question that is bugging me is: do these companies get certain access or info about your personal profile? As we know, facebook isn’t very protective about privacy issues…
    I ask myself why people would like to join a Coca-Cola fan page? We are all consumers, we can’t escape that, but why would people want to worship a company whose only objective is to get money out of you??!

  2. Ryan 16:07, Feb 9th, 10

    Dan,

    Very true. I always see ads on Facebook. I think your point on coupons is really interesting and can definitely help companies. However, I would like to know if the ads are just arbitrarily placed or for example, do the ads that I see on mine have any relevancy to who I am and what type of products that I buy??? If there’s anyway you can find out let me know.

    Nadine,
    People love their brands and products that go with it. I think its a genius marketing scheme. People are loyal to certain brands that they like. I think people that like Coca-Cola would join their fan page because they are simply just that – fans. I don’t think it’s worship per se, but its kinda like joining a group or supporting a cause on Facebook. Companies are smart and getting smarter with reaching consumers these days. Facebook is a great way, and as we are seeing, they are capitalizing off of it. To what extent, as Dan insinuates is a great question>>

    “I believe Facebook could utilize fan pages to more effectively measure “buzz” themselves to provide individualized reports and consulting for companies (similar to Google for SEM/SEO).” – Dan

  3. mushon 09:46, Feb 13th, 10

    Another aspect of this that also touches on Nadine’s point is that when you get visitors on your brand’s site you don’t know anything about them. You actually need to promise them quite a lot to have them expose their contact information an you very very rarely would get them to let their friends know they’re into your brand. With FB all of that is done with one click of becoming a friend and is actually maintained through time. The brands you are a fan of appears even on your search result!yAo essentially by becoming a fan, you gave your contact and demographic details, you’ve advertised to your friend and placed (essentialy) an ad on your profile page. All o that with very low (and often no) costs to the advertiser. This is PR paradise.

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  1. [...] provides the CO with a lot of information virtually for free. Paraphrasing Mushon on Dan’s post: “this is PR paradise … by becoming a fan, you gave your contact and demographic details; [...]