by Edmund Lee
Published: February 14, 2011
NEW YORK (AdAge.com) — When Ron Faris was looking last year for a way to build out a Facebook page for Virgin Mobile USA, where he is the head of brand experiences, he didn’t contact Facebook.
“The beauty of Facebook is its open nature,” he said, referring to the company’s publicly available software that allows anyone to plug into its site, also known as an API. Virgin’s Facebook page at the time was set up to function in a more workaday manner, responding to customer queries or complaints, but Mr. Faris wanted to broaden Virgin’s presence by incorporating participatory features like polls and calls for content, work that not too long ago would have gone to an ad agency.
Instead, Mr. Faris cold-called a small New York-based startup called Buddy Media that specializes in Facebook applications, which set Virgin up with the aforementioned features. Tellingly, even though Mr. Faris considered Buddy an agency in this regard, the company, in fact, does not think of itself this way.
“We’re not an agency,” Buddy Media CEO Mike Lazerow said. “We don’t strategize; we don’t service clients or anything like that. We do enterprise software. We do social technology.” It’s a distinction that underscores the blurring and, according to some, tension between advertising agencies and technology companies around the social network, especially as Facebook has increasingly become the primary destination for a large portion of the online audience, and thereby a crucial media outlet for advertisers.
The hordes of brand-focused companies looking to tap into the largest social network, like Mr. Faris, have had to go through third-party technologies to carry out their social-media plans instead of going directly to Facebook. This removed contact, so to speak, is in fact a point of pride for the company and is an unaffected result of its open nature, said Ethan Beard, Facebook’s director of platform product marketing. “We really want to be the technology that allows our users to connect and share with friends and family,” he said. “We’re not the media; we’re the technology.”
It’s an ethos that has resulted in a third-party economy around Facebook in which major companies are contracting marketing work with a select group of software developers. The Palo Alto, Calif.-based internet giant has actually started to vet these outside developers under the designation “preferred developer consultant,” which at current count numbers 48. At issue, according to one industry insider, is the fact that web campaigns had for so long started with a blank slate, often resulting in what the industry calls a microsite, or a one-off web page that would be left unattended or taken down after the life of the ad campaign. Still, it offered a lot of work to agencies focused in digital.
Facebook’s fixed structure, however, does not require as much ground-up building, and much of the marketing can be done with off-the-shelf software. Context Optional, another preferred developer, says most of its work comes directly from brands, instead of through agencies.
“Eighty percent of our revenue comes directly from the brands,” said Context Optional CEO Kevin Barenblat. “But we also work with agencies — it depends on whether the company works more closely with their agency or whether they want to manage their social media themselves.”
Mr. Barenblat pointed out that social media is different from advertising. “Brand messages typically come from the companies themselves,” he said.
It’s a view that other preferred developers also hold, and given the rising interest in social-media plays, WPP recently took a $5 million stake in Buddy Media, suggesting that technology companies may have a bigger role to play in marketing, whether within agencies themselves or directly to big companies looking to manage their brands within Facebook. But Mr. Lazerow warned, “We provide the underlying technology to any client, whether it’s within WPP or not,” he said. “We’re not going to steal anyone’s customers.”
In fact, for a forthcoming Facebook campaign, in addition to Buddy Media, Mr. Faris has also brought in Los Angeles-based agency Talenthouse to drive Facebook users to Lady Gaga’s “Monster Ball” tour, which Virgin Mobile is sponsoring. Talenthouse has set up a submission page where Facebook users can submit short videos to become one of 10 official bloggers for the tour. It’s an effort to drive both “likes” and content that keeps Facebook active.
Talenthouse founder Amos Pizzey said his company specializes in influencing this kind of collaborative content, which he said had been missing from precious social-networking plays. “In the early days on MySpace, bands got huge numbers of fans, but it didn’t do anything,” he said. “They just sat there. They became a dead community.”
Mr. Pizzey said even in the age of Facebook it’s not enough to just feed people with random content. “You have to draw them in,” he said. “Don’t care how cool it looks, it has to be gripping, they have to want to do it.”
But part of what drives users to company’s Facebook pages, however, is straightforward advertising, which has exploded on Facebook. The company took in $1.86 billion in ad dollars last year, based on estimates from eMarketer, with $1.12 billion coming from the company’s self-serve model. That product is similar to Google’s long-standing system, which lets advertisers plug in to an auction-based bidding platform to buy ad space.
That can come at a significant cost. While anyone can make use of the company’s self-serve system, big advertisers looking to buy in bulk have to use yet more third-party software, such as one from New York-based Blinq Media, which allows media buyers more control over the system than Facebook’s native interface allows. Costs for every thousand impressions on Facebook run around $1.00 within the self-serve marketplace. But advertisers looking to buy on Facebook’s famed home page have to go directly to the company’s in-house sales team, which has exclusive rights to that space. According to insiders, the company charges around $5 for every thousand homepage impressions.
Mr. Faris, however, does not buy any media. “The world of brand experiences is not about advertising,” he said. “It’s all about conversations. About building relationships with your consumers. Your fans. That’s what’s exciting about Facebook. It’s not about my agenda; it’s about the consumer’s agenda.”