Facebook increasingly showing corporate side

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Mark Zuckerberg's move to advertising turns some off, but Facebook makes it painless. (RICHARD DREW / THE ASSOCIATED PRESS)

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Facebook's Canadian office in Toronto. Highly loyal Canadian users are even described as 'addicted' to the social networking site. (FRANK GUNN / THE CANADIAN PRESS)

TORONTO -- People often wonder how, exactly, Facebook makes so much money, enough to make founder Mark Zuckerberg one of the richest people in the world.

After all, it's free for its nearly 630 million members to use and most would say it isn't overly littered with ads.

So why is the social networking site supposedly worth about as much as McDonald's or Disney, at least according to recent valuations as high as US$75 billion?

There's one key stat that helps explain it all. Although many consider Facebook a place where friends and family share news and photos, it's increasingly a place where companies share product pitches with willing, receptive audiences.

Every day, an average of about 15 million connections are made between users "friending" each other. Meanwhile, about 50 million connections are made between businesses and users, who have no qualms announcing they're a "fan" of company X.

So does that mean Facebook users are cool with corporate messages infiltrating newsfeeds, and are they willing to share ads with friends?

Absolutely, says Facebook Canada head Jordan Banks.

"Two years ago, you'd hear brands talking about testing Facebook, seeing how it works; they'd dip their toe in the water. And last year was all about hearing, 'We don't need to test anymore, we know it works, now we need to figure out how to make it a meaningful piece of everything we do," Banks said in a recent interview.

Considering the ubiquitousness of Tim Hortons outlets, it should come as no surprise the chain is one of the most popular brands on Facebook in Canada, with more than 1.4 million fans. About one in 12 of Canada's 17 million-plus Facebook users are linked to Timmies.

Tim Hortons created its Facebook profile in 2009 and has since started buying ads -- which Facebook euphemistically calls "engagement units" -- and is growing its online presence, said David Morelli, director of public affairs for the chain.

Their budget for Facebook ads is conservative and Tim Hortons is still trying to figure out their effectiveness against other types of marketing, he added.

"We're learning and trying to determine what are the right metrics and what are the right spends in those areas... do we see a bump in business? We're testing the waters with that," Morelli said.

"But one of the things we found was, unlike traditional ways we've reached out to our customers, we're not talking at them, we're talking with them on Facebook. So it really gives us a way to engage with our friends and customers in a different way."

Encouraging users to post about loving Tim Hortons' coffee results in a special kind of advertising money can't buy, Banks said.

"You no longer need Oprah Winfrey to take your product and name it one of her favourite things on her show, you no longer need Ashton Kutcher to tweet to his 6.5 million followers that this is a great product. Having way more influence than either of those in today's day and age is your friends, your family, your colleagues and people you care about, that are most like you."

Plenty of those users didn't respond well to an announcement in January about so-called Sponsored Stories, a type of ad that co-opts user content for marketing campaigns.

"If you don't want your actions being boosted then you can go to your preferences and just opt out," Banks said in defending the feature.

"Ultimately, we want you to control 100 per cent of the experience you're having: what you're sharing, when you're sharing it and with whom you're sharing it."

As Facebook grows into more of a corporate platform, some might predict a backlash. Users certainly rebelled against privacy encroachments.

A search of publicly accessible Facebook posts does reveal a virtually endless list of complaints about ads.

"Can anyone tell me what the hell is the problem with Facebook? Today, it has all these ads scattered all over the place -- and I must say it looks TERRIBLE!" posted Marcee Lee Winthrop recently.

"In fact, it looks juvenile! Facebook must be in need of money -- this is probably greed-based! I hate it!"

"Is it just me, or are there tons more advertising on FB?" wrote Janice Behler Chapman. "I hate it. Reminds me of reading a magazine. More ads than articles. Is there any way to stop it?"

But Banks isn't worried that deriving more revenue from advertisers will turn off users.

"I don't think there's a risk of that happening because, ultimately, the Facebook platform is a function of what users want to do. So, if a user's thinking it's too noisy, they're going to stop fan-ing brands and they might start X-ing out ads and we'll be able to see that," he said.

"I think we're so early to this game that we're only going to get better with that. And as we get better with that it only becomes more rich and compelling for the users and they end up appreciating it."

While there are users who will certainly boycott Facebook when it gets too commercial, the social network isn't going down the wrong path, predicted Queen's University business Prof. John Pliniussen.

Young consumers born into a digital world will completely embrace the idea of getting marketed to personally, provided the offers are good and worth their time, he said.

Pliniussen recalled getting stuck in a long line to pay on a recent shopping trip. In front of him was a young woman, who seemed completely unperturbed by the inconvenience as she bounced through social media sites, including Facebook, on her mobile phone.

"If there was something that popped up and knew her profile, that understood she was a woman and in her second year of university, she'd be very comfortable in tapping into that and doing shopping based on that, as would I," he said.

"I want them to know I'm interested in cars, I want them to know my kids are in university, I have no problem with that, if there are special group-buy advertisements that pop up while I'm on there and give me a chance to save some money or make some bookings without me having to search for it, I find that very convenient.

"So I'm sure what they're trying to do is have us opt in for things that fit for our profile."

That anecdote is music to his ears and Banks says he's finding a receptive audience in Canada to work with.

"At (Facebook headquarters), whenever people refer to Canadians, the word they always use is 'addicted,' because across every engagement metric that matters we are way over-indexed. And, if you take a look at the growth of that, there's been no deceleration. We continue to grow at engagement levels that are unparalleled around the world," he said.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition March 26, 2011 B19