Facebook, currently bedevilled by reports that its growth has stalled in the US and that older users are switching off, is forming an ad council (or client council depending on your preference) to help it generate the vast amounts of ad revenue it needs to justify its likely stock market price tag when it floats sometime over the next year.
The first two members of the 12-strong council to be named are senior Coca-Cola marketer Wendy Clark and Nick Brien, CEO of Interpublic’s McCann Worldgroup.
Interpublic bought a $5m stake in Facebook in 2006 as part of a deal in which it pledged $10m of client money to the embryonic social network. That stake is now worth between $200m and $500m depending on Facebook’s ultimate valuation (current estimates are between $50bn and $100bn).
Facebook is set to take about $3.5bn in ad revenue this year, up from $1.8bn in 2010. But to increase this to the levels required it has some tricky hurdles to overcome.
One is the issue of privacy as it seeks to leverage the vast amount of personal information it holds on its near 700m users. Even more troublesome is the fear that a more commercial Facebook is driving away users in ad-savvy markets like the US and UK.
One of the big attractions of Facebook to its millions of early users was that it wasn’t commercial, to these users it was their social network site which Facebook kindly hosted for them.
So a more commercial Facebook may drive away more users. And there is also the dreaded possibility that some users are just getting tired of it, the MySpace effect.
All of this would have been on the mind of Facebook ad boss Carolyn Everson (who quit Microsoft for Facebook last year, much to the ire of former boss Steve Ballmer) when she addressed the great and good of the ad world in Cannes yesterday.
“We have created a platform to reach an unprecedented number of people but each of you have the opportunity to design the creative idea that truly gets people excited. I think that it’s fair to say that we all must think about the way we approach creativity, the way we market products and how we create meaningful experiences in a new way,” she said.
As well as the obvious schmoozing, this rather suggests that Everson and her colleagues at Facebook are unsure about how to build the site’s advertising capability without turning off its users.
Her mooted ad council will meet four times a year and will include, she hopes, representatives of all the big marcoms companies plus, presumably, some more major advertisers.
Well it’s two down (Clark and Brien) and ten to go. But if she includes WPP, Omnicom, Publicis Groupe, Dentsu and Aegis that only leaves five spots for advertisers with no room for indies or digital networks like AKQA.
And what level would the people be? WPP’s Sir Martin Sorrell would presumably think McCann’s Brien a junior officer compared to him so it would be a job for digital boss Mark Read presumably (and Sorrell won’t be pleased that Interpublic got in first). And what if a big advertiser wants to send a bright young thing just out of college who actually uses Facebook? No, you can’t do that Mr Weed.
So we’ll see if the Facebook ad council is actually a goer or just a bit of good PR at Cannes.