When you share on Facebook that you like some flavor of ice-cream or that you are a motorcycle fan, do you think Facebook just sits on that kind of information? You are wrong they sell it out to advertisers who use this data to target their customers. With a database of over 800 million people around the world, this is the largest databank of this kind of information.
Facebook is overtaking Yahoo! as the top destination for online display ads with a majority market share in revenue from this source of up to 72% and a crazy $5.75 billion. This is a forecast for the next year.
It will be 7.2% of the total online ad spending by companies in the US net space. Talking about the rest of the world, the total worldwide spending for ads online is expected to be around $8 billion in 2012 and around $10 billion by 2013. In US alone marketers spent $2.74 billion on social networking sites and this will be $4 billion by 2012 and go up further by 2013.
Facebook has made such large ad revenues possible by keeping its product at the highest level. Facebook does not show every ad to everyone but to only the target market of that product. This makes the ad relevant to the consumer and he/she is not irritated by the ad.
The constant strategy of Facebook is that it is that it only makes you like an ad and share it with your friend hence making sure that the ad is not forced upon you. This way it can also have a greater chance of you actually buying that product since it is recommended to you by a friend.
Time has taught Facebook how to handle the ad game properly. Its previous attempt at advertising called ‘Beacon’ failed because of poor execution but this current trend seems to follow a different story. Google did something similar a while back and now Facebook seems to have got the trick right.