This is Why Facebook is Soaring

NEW YORK (MainStreet) — The price of Facebook has more than doubled in the past 10 months for one reason.

Simply put, Facebook is the greatest advertiser in the world.

Allow me to explain.

Any Facebook user over the last several years can testify as to how horrible Facebook ads once were. They were annoying, irrelevant and frustrating -- to put it lightly. A typical advertisement would trick you into clicking on it, take you to a sketchy website and then try to sell you a crappy product.

Slowly, things began to improve.

As larger, more reputable companies began to advertise on Facebook, both the content and the appearance of their advertisements improved. Similar to how Google blurs the line between advertisements and search results, Facebook has blurred the line between posts from friends and sponsored posts from companies. Placing sponsored posts in a user's newsfeed allows for a consistent look and feel across both desktop and mobile platforms.

More important than the look and feel of Facebook's ads, however, is their content. While my own feed was generally filled with investing related advertisements, Google and other companies presented me with the same types of ads. While these ads were relevant to me, I never clicked on any, because they were never compelling enough.

The best advertisements, the ones you do click on, show you a product or service before you even realize you want it -- and this is exactly what Facebook is doing.

Just the other day, as I was scrolling through my Facebook feed on my iPhone, a sponsored post from Southwest Airlines appeared. It was advertising a new route from Pittsburgh (where I live) to Nashville.

This was strange not only because Facebook has never shown me an airline ad before, but because I have never done anything that would enable Facebook to know that I was interested in flying to Nashville (which I am). Then, I connected the dots.

Facebook knows where I live and also knows who my close friends and family are and where they live. I was shown this Southwest ad, because Facebook knows I live in Pittsburgh and that my brother lives in Nashville. Amazing. Despite routes from Pittsburgh constantly being changed, I was only shown one -- the one I was interested in. Facebook finally streamlined the vast amounts of information it possesses, information that no other advertiser has. The potential of this system is incredible.

Imagine you only want to advertise to college couples in a long distance relationship.

Or perhaps you want to advertise to engineering majors in North Dakota.

Maybe you even want to advertise to Cadillac driving women in their 20s that have a brother that lives on the West Coast who is married to someone from Europe who earned a Ph.D. in math.

Yes, you can do all of this through Facebook.

There is no other company that can deliver such targeted ads.

If you're a company looking to advertise, why would you pay any other advertiser to use a carpet bombing strategy when you can use Facebook to connect only with your target audience?

After Facebook's most recent quarter that sent the stock soaring, many applauded the fact that Zuck and crew finally figured out mobile. While this is important, other companies can also figure out mobile. No company, however, has access to the information that allows Facebook to deliver the greatest, most targeted advertisements in the world.

--Written by Alex Pottmeyer for MainStreet

Show Comments

Back to Top