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Graz Belli, Third City - Unlocking Facebook's value

Brands must look beyond advertising and focus on building long-term trust and engagement.

The caption of a 1993 cartoon in The New Yorker read: 'On the internet, nobody knows you're a dog.' The joke marked a significant moment in the history of the internet and its adoption, when anonymity was the name of the game.

It doesn't work anymore. The ascendancy of social media, particularly Facebook, has flooded the net with real identities, real people and real friends - not fake ones.

Nearly a billion of these friends now congregate on the social network behemoth, dependent on it to interconnect and curate their lives. Yet while the value of Facebook to consumers has been realised, how to make money from these 'friendships' is the trillion-dollar question vexing Facebook, its investors and brand owners too.

The obvious, but lazy, answer is to default to advertising. The sheer scale of Facebook's 'audience', and the reams of personal information that populates it make it, on the surface, very saleable as an advertising platform.

The uncomfortable truth, though, is that people don't want to be bombarded with broadcast messages here.

Findings from Ipsos reveal eight in ten people disregard ads that feature on the network, a view that is backed by hard analytics. For every 10,000 ads delivered by Facebook, five click-throughs are generated, proving reach means nothing if the ads are ignored. General Motors was the first big brand to recognise this, pulling its $10m Facebook advertising budget earlier in the year.

Pressure from shareholders to reverse Facebook's tanking share price is pushing the company to cast around for effective advertising formats and to figure out how mobile can unlock its commercial potential. This presents even more of a challenge.

Facebook wasn't built with mobile in mind. The company may have 600 million mobile users, but adapting the platform and its advertising format for mobile devices is a daunting task.

It's all down to size. Smartphone screens are small and don't deliver a good environment for advertising.

The ads are microscopic, and as users tend to spend less time per session browsing, they are less valuable to advertisers. This means Facebook will need to blitz users' mobile news and other feeds with all manner of paid-for content to generate the level of return desired by shareholders.

What does this mean for marketers? It's not our concern how Facebook monetises itself. Our concern is how to get people to share with friends and family in an environment where you can't control messages or put words in people's mouths - something the PR industry has tackled for decades.

The answer lies in letting go of our fixation with measuring success by the number of sales in the short term and recognising Facebook's true value to brands in building trust, favourability and engagement in the long run.

Take Bodyform's genius response to sarcastic comments posted on Facebook about its 'misleading' advertising campaign. A young man called Richard Neill protested his jealousy of women during the 'wonderful time of the month' suggested by the ads.

Rather than end the discussion, the company created a self-mocking video that delivered an apology from a fake CEO who admitted that the advertising wasn't factually correct because 'we wanted to protect men from the harsh realities of womanhood'.

This banter risks going wrong, but is normal behaviour between friends. Friends listen, share, promote their interests and develop deep bonds.

Brands should do the same. They need to look beyond advertising to unleash the true value of Facebook. And so does Facebook.

Views in brief

Pinterest: the online equivalent of a teenage girl's bedroom wall or useful corporate resource?

Brands such as Asos have shown us that Pinterest can be a great tool to showcase design and beauty. I think we can expect more retailers to open up virtual storefronts shortly. The key questions for Pinterest are whether it can solidify its user base and see off increasingly aggressive legal challenges around IP, particularly from brand owners and photographers.

Graz Belli is founding partner at Third City.

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