Facebook's big sell

LONDON - As the social networking site flourishes, the challenge is to turn its popularity to commercial ends.

Facebook's big sell

'Facebook is more addictive than crack cocaine', or so says Spencer Steel, IT manager at Informatiq Consulting, which was one of the first UK companies to ban employees visiting the site.

Despite this and other corporate clamp downs, Facebook is a social phenomenon, with one in every five UK internet users visiting the site on a regular basis. The social network, launched three years ago by Harvard students, is now more popular in the UK than News Corp's MySpace, with 6.5m monthly users, according to the latest figures from Nielsen//NetRatings.

Having established itself as a firm favourite of UK consumers, Facebook is now turning its attention to becoming a viable option for big-brand advertisers, keen to tap into its vast user-base. Last week, it appointed Yahoo! commercial director Blake Chandlee as UK head of sales - its first employee outside the US. His role will be to build Facebook's UK sales team, working with advertisers and agencies to develop commercial opportunities on the site.

'The UK is an important market with more than 6m Facebook users, and is the third-biggest country for us outside the US and Canada,' says a Facebook spokesman. 'The UK also has one of the most active online advertising markets. We are already seeing exceptional demand from UK advertisers.'

Facebook has already made in-roads to the UK, striking partnerships with advertisers including H&M, Sky and Virgin Mobile. It is keen to develop a commercial strategy that goes beyond standard banners and buttons, and brands prepared to spend more than £12,000 a month can take advantage of integrated campaigns that tap into its viral nature (Marketing, 12 June). Chandlee and his team will liaise with UK brands to create sponsored groups, where advertisers can further interact with consumers, provide special offers and become part of the site's 'fabric'.

While this is sure to prove a compelling prospect for UK advertisers, Facebook will have to work hard to establish the value of its commercial offering alongside the likes of AOL, MSN and Yahoo! 'The danger is that marketers see Facebook as just another platform to run more banner ads,' says Norm Johnston, chief executive EMEA at MindShare Interaction.  'The opportunity lies in helping advertisers create valuable, branded applications and experiences that complement the reason users visit the site in the first place.'

Facebook's fledgling commercial strategy has been criticised by users keen to keep the social networking site free from advertising. It has also come under fire from advertisers, with brands including Vodafone, First Direct, Halifax, the AA and Virgin Media pulling their campaigns from the site after their ads appeared alongside a British National Party group.

Facebook reacted swiftly by updating its system to allow UK brands to opt out of appearing next to controversial content. However, the incident may have led marketers to think twice about making their first foray onto Facebook.

The fact also remains that, as Kieron Matthews, head of marketing at the IAB, says: 'No one knows exactly how commercially successful Facebook will be in the UK.' One of Chandlee's priorities will be to address this by convincing advertisers that Facebook is a valuable and cost-effective way of reaching high numbers of internet users.

With media agencies claiming that click-through rates for banner ads on social networks are far lower than on other sites, brands will need to be creative to get the most from their campaigns. 'So far there have been few examples of advertisers exploiting the full potential of Facebook,' says Wayne Arnold, European chief executive of digital agency Profero. 'Marketers will need to invest time and effort in creating bespoke campaigns tailored to specific user groups.'

In the hope of doing this, Facebook recently opened its application programme interface (API) to third parties. The intention is to provide marketers with access to the building blocks of the site, so they can create their own branded widgets and applications. Facebook has already partnered 65 companies that plan to develop services for the social network's user-base. One of the first will be Amazon.com, which plans to offer a widget that allows consumers to display their book reviews.

Microsoft and Google are so convinced of the commercial potential of Facebook that they are reportedly prepared to battle it out for a 5% stake in the social network, which is valued at between £5bn and £10bn. It falls to Chandlee and his team, then, to move quickly to capitalise on this popularity before another player comes along and steals the social networking crown.