The social networking giant, Facebook Inc (NASDAQ:FB), is increasingly becoming a central hub for some 955 million monthly active users (MAU, as on 7/12) on both PC’s and mobile devices. The high level of user engagement in the form of sharing personal information, forming groups, communicating via chats, and posting on walls etc, create a valuable opportunity for advertisers and marketers to promote their products and services to the relevant audience. As of now, Facebook Inc (NASDAQ:FB) generates its revenues from two main sources, those sources are, selling targeted ads on user pages and revenue-sharing agreements with third-party application developers. The company’s revenue model is based on attracting and increasing its user base, and monetizing the same with advertising and payments.
Facebook Inc (NASDAQ:FB) demonstrates many of the qualities that an online advertising company should possess, according to a research report from Deutsche bank. Some of these are listed below:
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In terms of reach, Facebook Inc (NASDAQ:FB) is second only to Google (NASDAQ:GOOG) and controls about 25 percent of the global internet traffic on a daily basis. In terms of average time spent by a user, Facebook is well ahead of any other publisher or platform.
Another point is the quality of traffic; Facebook’s 100 percent traffic is organic. The users of Facebook spend a lot of time on the site, which is something very important to advertisers. Facebook’s daily average users (DAUs) are 58 percent of the 955 million Monthly average users (MAUs), and also some of its users visit the site multiple times per day.
Given its unmatched popularity, Facebook Inc (NASDAQ:FB) has transformed into an experimental allocation to a ‘must-buy’ space for any digital advertising strategy today. The social networker enjoys better target audiences than any publisher or ad network. As per the report from Deutsche Bank “It has unique ad formats specific to the social media environment (sponsored stories). Facebook is both vertical and horizontal, given the significant reach and targeting capabilities, and the company controls its own inventory. That 4-5 Facebook specific digital agencies, which have been acquired in summer 2012, speak of the future importance of Facebook’s advertising platform.”
The only minor setbacks that Facebook Inc (NASDAQ:FB) has experienced, relates to it’s positioning towards the top of the purchase funnel, and its temporary headwinds from the mobile mix shift, as per the report from Deutsche Bank. With its appealing “Social by Design” approach, the company is expecting to win ad campaigns from Fortune 500 companies. Apart from this, Facebook is also focusing on direct response marketers by introducing new ad units and tools. As per the report Facebook, “recently introduced new CRM tools for direct response marketers, who can now import customer lists to better target Facebook users who may not be fans, and is also experimenting with search ads for nonperson search (15%-20% of the1B daily queries are non-person, we estimate).”