In 2013, Facebook reported earnings of $7.872 billion, primarily from advertisements. This figure was considerably more than analysts predicted, but many of Facebook’s advertising partners have voiced criticisms about its advertising system. Much of this criticism focused on the inability to target certain users.
In response to these concerns, Facebook announced that it was introducing new targeting options that would allow advertisers to connect with market segments. These targeting options include, demographic, geo location, behavior and interests. This refined marketing system would enable advertisers to devote their marketing dollars to groups which are more amenable to their particular promotional message.
One of the most important categories is location. Advertisers may now direct their ads to Facebook users who reside in a particular country, city, state or, even, zip code. Businesses who provide local products and services no longer need to worry about spending in geographical markets with little relevance.
As Facebook is a social site, it is only natural that it would enable advertisers to broadcast their market messaging to groups that have interests that dovetail with their products. For example, users who have become engaged can be targeted by wedding related companies. Similarly, other major life events can also enable interested advertisers to direct promotions at users.
These marketing messages can be linked to various keywords or activities. Advertisers only need to search for a topic and link their ads to the pages of users who have shown an interest in that topic in the past.
Key demographics are also easily targeted. Social characteristics like age, gender, education and occupation can be used to refine market segments. In some cases, even highly specific classifications like job title can be used to further narrow targeting. Of course, advertisers can link their ads to users who have shown interest in the organization, brand or product.
Facebook has also enabled more powerful advanced targeting mechanisms like
- Custom audiences—upload a contact list for ad targeting
- Lookalike audiences—identify people who share characteristics with a company’s best customers
- Facebook exchange—find potential customers who have interacted with an organization outside of Facebook
Facebook has far exceeded revenue expectations in recent years due to its priority on mobile applications, but it has grown strongly in almost every earnings metric. It has increased daily active users by 25 percent to almost 728 million. The number of overall users has grown 18 percent to almost 1.2 billion. The number of mobile Facebook app users grew 45 percent in 2013 over the previous year; as of September 2013, there were 507 daily mobile users.
Expansion into foreign markets has also buoyed Facebook growth. While there was an addition of almost a million users in the U.S. almost, the vast majority of additional growth occurred in Europe, Asia and other emerging markets.
The recent $16 billion purchase of Whatsapp, a wildly popular messaging service in international markets, is Facebook’s next move in an effort to broaden its reach to a billion foreign online users not on Facebook. Eventually, this messaging service could serve as a stepping stone to bring them into the Facebook community.