Ad Spend Versus Marketing Spend
Will Facebook absorb five percent of online ad spend by year's end? According to how many media outlets are interpreting a recently published forecast, yes.
I say, not so fast.
There's spend and there's spend. Some of it is on digital advertising, and some is on digital marketing. There's a world of difference between the two - particularly prior to one of the year's most eagerly anticipated and ballyhoo'd IPOs.
The report in question is Efficient Frontier's Global Q4 2011Digital Marketing Performance Report. It states Facebook's spend share "reaches 2.7% of biddable online advertising spend in Q4 ."
OK, I can buy that estimate, give or take.
It's the 2012 forecast, however, that's highly questionable. Note that Facebook's 2011 spend share is qualified: biddable online advertising. I know what that is. Efficient Frontier's Facebook forecast for the coming 12 months is all over the board:
FaceBook [sic] WILL REACH 5% OF ALL ONLINE ADVERTISING SPEND BY THE END OF 2012. As marketers improve their ability to acquire and engage Facebook fans, brands will continue to pump new budgets into Facebook to capitalize on the social network’s reach and the amount of time users spend there."
Five percent may be a great headline, but it's highly unlikely that Facebook advertising is what's being referred to here. Will advertisers double their "biddable online advertising" budgets to "acquire and engage Facebook fans"? Don't bet the farm on it.
What I do agree with is that marketers will "pump new budgets into Facebook" to reach and engage consumers. Every single one of the 56 marketers I interviewed for my forthcoming research report on content marketing are creating more content, much of which is going into social media channels, such as Facebook.
What's important to understand (and it's hard to believe media reports on this have been so sloppy) is these are by no means advertising budgets. This is marketing spend, and much of this money is not funneling directly into Facebook's coffers. These new budgets are going into strategy, creative and production.
Anyone considering buying Facebook's stock would do well to understand the difference.