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June 20, 2010 10:47 pm
Facebook’s chief executive, Mark Zuckerberg, will make a rare on-stage appearance before the world’s advertising community this week as the social network strives to generate revenues that match its huge reach.
Mr Zuckerberg, who is usually more at home among software developers than ad men, will receive the “media person of the year” award at the Cannes Lions International Advertising Festival on Wednesday, after being interviewed in front of its audience of agency bosses and marketing chiefs.
This year’s Cannes Lions, historically an opportunity for ad creatives’ backslapping, will see more representatives than ever from the companies that pay ad agencies’ fees.
Chief marketers from Procter & Gamble, Unilever, Kraft and Coca-Cola, some of the world’s largest advertisers, will all present seminars at the event, in a sign of the shifting balance of power in ad land.
But agencies and their clients alike are desperate to better understand the world of social media, where brands can be built and broken by consumers beyond the control of traditional marketing.
In turn, Mr Zuckerberg’s attendance signals how determined Facebook is to woo the big consumer brands that have historically been wary of advertising online.
According to Experian Hitwise, Facebook displaced Google as America’s most popular website this year, with traffic to social networks also overtaking search engines in the UK.
With about 500m users, estimates of Facebook’s revenues range between $500m and $800m for 2009, with sales of about $1bn expected this year.
Ian Maude, analyst at Enders, says Facebook is “firing on all cylinders”, but adds: “They’ve really got to make [advertising] work. The fact that Zuckerberg is going to one of the main advertising events shows they are taking that very seriously.”
Just two years after beginning to monetise its audience in earnest, Facebook’s revenue per user is already half the level of that achieved by portals such as MSN and Yahoo, Mr Maude says. But relative to the many hours most users spend on Facebook each month, its income is “way behind” that of those more established sites.
Richard Pinder, chief operating officer of Publicis Worldwide, says Mr Zuckerberg should keep his pitch to Cannes attendees simple.
“Most of the people making the big decisions [in
ad spending] are not on Facebook,” he says. “They fear Facebook. Zuckerberg should explain what it is and why it works, and not make them feel bad about it.”
David Jones, global chief executive of Euro RSCG, says recent controversy over users’ privacy did little to dent clients’ interest in Facebook, but warns: “If they keep making these missteps, it’s going to be way harder. Their biggest challenge is how they monetise the unbelievable success they’ve had.”
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