In the second quarter of this year, Facebook announced record earnings, sending its stock price above $40 for the first time. For the period, Facebook generated $1.8 billion in revenue, 88% of which came from advertising. 10 years ago, this would not have been possible. To understand why, let’s back up a bit farther than that…
My first exposure to online advertising was in college. I worked at the Daily Illini newspaper and we had just launched a website and began selling banner ads on it. Due to limited inventory and a highly-targeted audience, we were able to command $20+ CPMs.
In July of 2000, I started my first job out of school at L90, one of the first online ad networks. We represented some premium sites on an exclusive basis (read: $20+ CPMs) and had hundreds of other sites that could be packaged as channel or run-of-network buys (read: $2 CPMs).
Over the next 5 years, I worked with hundreds of clients ranging from big brand advertisers (read: $20+ CPMs) to direct response marketers (read: $2 CPMs). Being exposed to so many different campaign goals and so many sources of inventory gave me a pretty good view of what really worked when it came to digital marketing.
L90’s ad server, adMonitor (built by the guys behind Rubicon Project and eventually sold to DoubleClick) ran some pretty nifty budget allocation and optimization algorithms. We also had campaign coordinators (my trusty advocate for many years was Ivette Osorio aka ‘Lil B) who manually optimized campaigns to meet delivery and performance goals.
During my time at L90 (which became MaxOnline after acquiring DoubleClick’s media network and soon-ish thereafter sold to IAC, which sold to Ask Jeeves, which sold to IAC) I saw many ad units come and go — RIP pop-ups and PowerAds. I also saw many publishers come up and go – RIP Thirsty.com and WebMillion.
And, while I saw different many types of ads perform very differently across many types of websites, there was one constant, inalienable truth that bared out in every single direct response (DR) campaign we ran… social media inventory did not work!
To be sure, from 2000-2005, social media was much different than it is today. At that time, social media was generally referred to as user generated content (UGC) and was comprised of any web page that featured content created by users – ie, chat rooms, bulletin boards, dating profiles, etc.
At L90, we had quite a bit of UGC in our network and those pages/publishers were always the first to be optimized out of DR campaigns. Even at $0.20 CPMs, we should not make them hit performance targets. Bottom line, the content was crap and the people reading it were blind, at best, and annoyed, at worst, by ads.
Today, social media is much more than just UGC. And advertising on social media works. It really works!
Here are 7 things that did not exist 10 years ago and, hence, why Facebook would not have made any money back then:
Today, Facebook has become a staple of every major marketer’s planning and budget cycle. Twitter is fast on its way to reaching this status. And LinkedIn is a must-buy for any B2B marketer. 10 years ago, these sites would have been the first to get cut from the buy. What a difference a decade makes! Makes you wonder what marketing tactic we consider crap today will emerge as a $2 billion quarterly opportunity in 2023. FWIW, my money’s on mobile ads.