Facebook’s bid to be the new king of advertising

        

To achieve the deepest, darkest dreams of Mark Zuckerberg, the company must become the first one that dominates both the kind of precision ads that built Google and the emotional ads that made TV the world's dominant marketing force.

Facebook collects less than the 5% of the US$500bn spent on advertising each year. To achieve the deepest, darkest dreams of Mark Zuckerberg, the company must become the first one that dominates both the kind of precision ads that built Google and the emotional ads that made TV the world’s dominant marketing force.

Facebook has so far cracked the first half of that equation, following in the footsteps of Google by locking down what’s called “direct response” advertising. If I own a store in Brooklyn that sells running shoes, I naturally want to find people who are in the market for what I’m selling. If someone types “running shoes Brooklyn” into Google, the company has a pretty good clue that is a person I want. My store can pay to show a link to my website to this probable Brooklyn runner.

Largely because Google became an efficient way for many businesses to find people who are looking for exactly what the businesses are selling, direct response ads make up the majority of online advertising. Facebook is pretty good at this type of advertising, too, again because we tell Facebook who we are and what we like.

But dominating direct response ads with Google isn’t enough for Facebook. About $200bn is spent each year on TV commercials, mostly on direct response’s handsome brother, branded advertising. Brand ads are those TV commercials of a smiling couple driving an Audi through a snowy mountain range. The next time we go car shopping, Audi wants us to have this innate feeling that its vehicles will make us happy and beautiful.

Away from the Internet, brand ads make up a majority of advertising. And they’re lucrative. The average cost to reach a thousand people with a prime-time TV ad was $50 in 2015, according to a Bloomberg Intelligence analysis. The comparable ad price on Facebook was $5.

Facebook wants these pricey brand ads desperately. Facebook’s Sheryl Sandberg is fond of saying that for advertisers and their $500bn budgets, the social network is like the Super Bowl every night. She’s wrong. Facebook is way bigger than the Super Bowl. More than 1,1bn people use Facebook daily. About 110m people watch the Super Bowl telecast.

Sandberg’s pitch is about convincing advertisers to think of Facebook as a place that is even bigger than TV’s biggest stage but with the stockpile of personal information to target ads only to people who are most likely to buy an Audi. In Facebook’s view, it is the best of Google’s bloodlessly efficient direct response advertising with the mass reach and charm of TV commercials.