Looking Back: The History of Facebook Ads

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February 2004 Facebook Launches as Harvard-Only Social Network

Thefacebook.com

Eduardo Saverin

Andrew McCollum

Chris Hughes

Mark Zuckerberg

Dustin Moskovitz

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It looks like this.

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March 2004

Just a month later, Facebook expands to Boston University, MIT, Boston College, Dartmouth College, Northeastern University, Stanford University, Columbia University, and Yale University.

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New Networks, More People2004-2006

December 30, 2004

Facebook Reaches 1 Million Users

Early 2005 Facebook Adds International

School Networks

September 2005 Facebook Adds

High School Networks

May 2006Facebook Adds Work Networks

September 26, 2006

Facebook Opens To Anyone 13 Years Or Older With An Email

Address

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$$$$$ First Dollars $$$$$

In 2004, revenue begins to flow in from Flyers purchased by students / local businesses for $10-$40 per day.

Displayed on Facebook HomepageTargeted at specific college campuses + eventsControlled by Facebook Makes up most of Facebook’s 2004 revenue

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2005

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Facebook looks like this now.

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Adding Features

October 2005 – Users can upload photos! Facebook’s interactive visual nature and voyeuristic capability send it soaring, and are

responsible for most time spent on the social network.

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The Age of Experimentation: Party Poker

Facebook’s first major ad deal Party Poker buys ads based on acquisition, paying $300 for each new

subscriber who signs up and puts at least $50 into gambling account Brings in around $60,000 each month in ad revenue Ends in 2006 when online gambling is ruled illegal in the US

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The Age of Experimentation: Apple

Apple sponsors an Apple Group, paying Facebook $1 per member, per month.

As the group grows, Facebook begins to make hundreds of thousands of dollars from Apple per month.

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End-of-2005 Stats

USERS: 5 MILLION REVENUE: $9 MILLION

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2006

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Facebook looks like this.

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August 2006: Three Big Changes

#1 – Open the gates.

Facebook Development Platform launches, enabling developers to create outside apps that work with Facebook.

What this means for brands: Developers now have the ability to bring Facebook friend relationships, photos, events, and profile info to web and desktop apps. This provides brands with a rich well of data and opportunity for growth, and also solidifies Facebook’s commitment to its open source developer community.

What this means for the average user: The Facebook experience gets extended into other areas it previously did not touch.

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August 2006: Three Big Changes

#2 – Demonstrate the possibilities.

Facebook (America’s second-largest social network to MySpace at this point) announces a one-year marketing partnership with J.P. Morgan Chase to promote the Chase credit card. Banner ads invite users to join a special Chase network wherein they receive reward points for actions like paying bills on time. Points can be converted for charity donations or redeemed for prizes.

What this means for brands: A bold expansion of new advertising possibilities on Facebook.

What this means for the average user: A more visible advertising presence enters user experience on the network.

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August 2006: Three Big Changes

#3 - Partner up.

Facebook and Microsoft form a “strategic alliance,” using Microsoft’s advertising technology and Facebook’s social network to bring “relevant advertising” to Facebook users. Microsoft’s adCenter becomes exclusive provider of banner ads and sponsored links.

What this means for brands: Instead of investing in their own advertising technology, Facebook uses Microsoft’s expertise to step up its ad game. Brands must obtain all banner ads and sponsored links from Microsoft.

What this means for the average user: The partnership aims to better connect relevant users and advertisers thanks to graphical ad placements, automated content-targeted ads, and the ability to aggregate user behavior anonymously. It’s the genesis of thoughtful, data-centric, targeted advertising on Facebook.

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September 2006: The News Feed is Born

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A Share Thing

November 2006 Features Added: • Copy and paste links to photos, videos, or any other content

directly to Facebook.• Click FFF on any site to automatically share the link on

Facebook.What it means: Instead of emailing your friend an article or tentative purchase, Facebook wants you to share that content using their site. This generates more user activity and is a great opportunity for advertisers to get more user data and get their content seen by more and more people. The beginning of organic reach?

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End-of-2006 Stats

USERS: 12 MILLION REVENUE:

$48 MILLION

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2007

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This is what Facebook looks like.

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Facebook launches its mobile site.

• Optimizes Facebook for small screens• Allows users to upload photos and

notes, send and receive pokes and Messages, and craft wall posts.

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2007: The Year of Major Advertising Developments

February Virtual gift shop launches.May Marketplace app for classified listings launches.Facebook platform launches with about 85 applications.August In response to Vodafone and other British companies pulling ads from Facebook after appearing alongside the ultra-conservative British National Party group, Facebook offers an opt-out feature that lets advertisers prevent their ads from showing up.SeptemberFacebook Flyers changes to performance-based auction model model called Flyers Pro. Advertisers set a max price for what they’re willing to spend and targeting features—like gender, age, location, and political views—are added. NovemberThe big debut of:

• Facebook Ads• Brand and business Pages• Facebook Insights• Beacon (an ill-fated ad system that encouraged the viral spread of brand messages)

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End-of-2007 Stats

USERS: 50 MILLION REVENUE:

$153 MILLION

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2008

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Any brand can now create a Page for free.

As brands advertise their Facebook Pages, they spend money.

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Facebook allows members to comment on Friends’ status updates.

The feature is so popular that nearly 1 million mobile comments are posted in the first 24 hours.

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Facebook focuses on raising engagementand improving mobile.

Facebook Chat launches.

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Engagement Ads

Facebook introduces Engagement Ads. Rather than clicking on an ad and being directed to another site, these ads keep members within the contained walls of Facebook and their social community. It’s also part of Facebook’s effort to combat the dismal click-through rates of “traditional” ad formats. There are three different manifestations of Engagement Ads:

Comments: Members can now leave comments on ads just like wall posts. Ads can show up to four comments per object, and the activity spreads to the users’ News Feed. Good for : entertainment brands, auto brands, apparel brands, new product rollouts.

Virtual Gifts : Brands can now create virtual items for users to share with one another. Good for : consumer products, entertainment and media brands.

Fans : Users can now become fans of products they like, triggering a notification to their network which then ties into social ads. Good for : established brands and luxury brands.

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Facebook Connect

Facebook Connect becomes available. This “next iteration of Facebook Platform” allows users to connect their Facebook identity, friends, and privacy to any site, enabling third-party sites (brands) to implement Facebook Platform features off Facebook.

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End-of-2008 Stats

USERS: 150 MILLION REVENUE:

$272 MILLION

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2009

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February 2009: Facebook adds the Like Button.

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Facebook begins to provide brands with advanced ad targeting options.

March Facebook introduces language and radius-based ad targeting.JulyFacebook launches connections targeting, multiple-country targeting and birthday targeting.SeptemberFacebook begins testing Ads API.

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Facebook launches self-serve Ads for Pages and Events.

In an effort to draw in more advertisers, Facebook puts Page set-up and management in the hands of Page owners for the first time.

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The Light Goes Out On Beacon

Facebook shuts down “Beacon” over privacy concerns. The program got in hot water because it posted updates to Facebook profiles when their owners interacted with partner sites.

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Third-Party Solutions & The Birth of Social Media Measurement

Nielsen launches Brand Lift with Facebook at Advertising Week, a product which measures the effectiveness of ads by polling users. This signals the growing interest in social media measurement and the ever-present question: “But is it working?”

Third-party solutions are developed to enable and manage advertising on Facebook, budgets start shifting to these solutions, and the need for data, metrics, and reporting increases as paid activity does.

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End-of-2009 Stats

USERS: 350 MILLIONMOBILE USERS:

65 MILLION REVENUE:

$777 MILLION

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2010

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Facebook rolls out the first mobile app for Facebook.

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2010: New Year, New Features

AugustFacebook launches Places.SeptemberFacebook expands its data offerings to advertisers by adding social context metricsto its performance analytics.NovemberFacebook rolls out beta version of Check-In Deals using Facebook Places.

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USERS: 600 MILLIONMOBILE USERS:

100 MILLION REVENUE:

$1.8 BILLION

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2011

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Sponsored Stories

In February 2011, Facebook launches Sponsored Stories. In this ad model, brands pay for user actions—like checking into a location or completing a level in a Facebook app game—to be displayed in the column to the right of the News Feed.

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Facebook Studio

In April 2011, Facebook unveils Facebook Studio to “showcase some of the world’s most successful social marketing”—and to reel in new advertising business.

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The News Feed Gets A Makeover

Between September and November 2011, Facebook enacts a number of changes to make the News Feed (and the ads on it) easier to sort and view.Top Stories are created to ensure users “won’t have to worry about missing important stuff,” putting the most “interesting” (interacted with and/or relevant to your browsing history) content closer to the top of Feeds.Ticker feature shows users what their friends are posting in real-time. “Like” Update shows users which brands they Like in their News Feeds.

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End-of-2011 Stats

USERS: 845 MILLIONMOBILE USERS:

350 MILLION REVENUE:

$3.71 BILLION

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2012

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Buying Instagram

In April 2012, Facebook buys Instagram for about $1 billion in cash and stock, vowing the two will remain separate but experience “increasing ties to each other.”

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Going Public!

On May 18, 2012, Facebook goes public. Theirs is the biggest IPO in internet history, with a peak market capitalization of over $104 billion. Below-predicted performance, NASDAQ roadblocks, and legal troubles plague the debut.

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Monetizing Mobile & Promoting Posts

Going public marks the beginning of greater efforts to make Facebook’s ad structure more lucrative. In the following months, there are many ch-ch-changes: June 2012 Facebook rolls out first mobile-only ad product, allowing advertisers to purchase Sponsored Stories solely on mobile devices. The ads appear within the News Feed.August 2012Facebook releases Sponsored Results, its first search ad units. September 2012

• Facebook begins testing placing mobile ads in third-party applications.• Facebook launches Facebook Gifts (after acquiring gift-giving app Karma).

October 2012To stymy News Feed clutter (and make some $$$$), Facebook introduces Promoted Posts, allowing users to pay to ensure their posts get seen by friends. December 2012Facebook announces it is testing a messaging option that lets users pay $1 to deliver a message to someone they’re not friends with.

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The Social Graph

How It WorksWhen a user friends another user, Likes a Page, comments on a photo, or plays a game, a connection is written to the Social Graph. This data goesto advertisers, forgingnew, valuable, socially-rooted marketing opportunities.

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A New Way To Purchase Facebook Ads

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How It Works

Advertisers purchase Facebook ads through real-time bidding.

Advertisers use cookie-based targeting + third-party information collected by research firms and data brokers to reach audiences on Facebook with more timely + relevant messages.

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USERS: 1.06 BILLIONMOBILE USERS:

543 MILLION REVENUE:

$5.85 BILLION

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2013

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Facebook Graph Search

Facebook continues its efforts to get the right ads and information in front of the right people—and challenge Google while they’re at it…

Facebook launches Facebook Graph Search, a semantic search engine that gives answers to “natural language” queries rather than a list of links. It combines big data acquired from Facebook’s one billion users and external data into a search engine that provides user-specific search results.

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Lookalike Audiences Launch

Lookalike Audiences help advertisers reach potential customers who share similar characteristics with current ones.

How It Works Advertisers upload their customer profiles (referenced by

emails/phone numbers). Facebook targets a similar profile of Facebook users for

advertisers. Personal information of a lookalike is never provided.

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Retargeted Ads

Now appear in the News Feed. They look like Sponsored Stories, but are picked for users based on data from the Facebook Exchange Program (browsinghistory outside Facebook).

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Dark Posts AKA Unpublished Posts are introduced.

These are posts that intentionally do not appear to all Page fans.

Advertisers can choose who sees an ad they post to their Facebook Page based on usual targeting criteria + interests.

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Facebook Home

Facebook announces Android: Facebook Home. Zuckerberg refers to Facebook Home as “putting people first instead of apps.” It’s a new home screen and app launcher interface for Android that gives Facebook notifications, News Feed posts, and messages more integration with the overall phone experience. See the ad here.

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Video Ads

Facebook rolls out a feature that allows advertisers to play videos in users’ New Feeds to promote movies and products on smartphones and computers.

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MONTHLY ACTIVE USERS: 1.23 BILLION

MOBILE USERS: 945 MILLION

REVENUE: $7.87 BILLION

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2014

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Buying WhatsApp

In a plan to dominate mobile and Web messaging, Facebook acquires WhatsApp for $19 billion in February 2014.

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Facebook Paper

Facebook releases Facebook Paper, a standalone mobile app radically different from the Facebook mobile app’s visual structure. It’s intended to act as a phone-based newspaper or magazine, with news and Facebook feed information all in one app.

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A New Ad Structure

Throughout March 2014, Facebook rolls out a new campaign structure across its ad interfaces, including the ads create tool, Ads Manager, Power Editor, and third-party ad interfaces built by Preferred Marketing Developers.

Facebook says the new structure will “make it easier for businesses to organize, optimize, and measure the performance of their ads.”

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Organic Reach Crisis

This development coincides with Facebook’s gradual squashing of organic reach via News Feed algorithm changes in an effort to remove their previous advertising model’s in-built spending cap and get more profitable.

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The Latest Numbers + Mobile Madness

Digital + mobile advertising are growing, growing, growing.

Facebook reports profits of $642M during the first quarter of 2014, beating analyst expectations.

Mobile now makes up 59% of advertising revenue, up from 30% a year ago (and will only continue to grow).

In the first quarter, 1 billion of Facebook’s 1.28 billion users accessed the site through a mobile device.

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Conclusion

If there’s one thing Facebook’s ad history shows us, it’s that the social media giant is fearless about testing new ways to monetize its platform, which has led to many great successes and a number of clear failures too (ahem, Facebook Deals, anyone?).

As Facebook looks to the future, one of its greatest challenges will be balancing “making the world more open and connected” with making its ad structure pay more. Changes are happening at warp speed, and we can’t wait to see what’s ahead.

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Thank You!

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