Facebook talks 'The Real Deal' in exclusive interview

Facebook had the closing keynote honors at Advertising Week in New York City recently and Chief Revenue Officer, Mike Murphy, evangelized the power of social media to impact 18-24 year old “net natives” living in an “always on broadband environment” and the unique opportunity for Facebook to foster “active sharing” online.

Murphy showcased how brand marketers are leveraging the Facebook community to actively share their messages with Facebookers.

I spoke with Melanie Deitch, Director of Marketing, yesterday by phone to discuss recent changes at Facebook and its advertising initiatives. Below are my “Real Deal" questions” and Deitch's responses in italics (responses may be slightly paraphrased).

1) The Facebook tag line is that it is “a social utility that helps people better understand the world around them.” Facebookers’ reactions to Mini-Feeds and News Feeds included starting online petitions to express concern over the changes to Facebook. One petitioner was unhappy because “We all know who has dumped who, who is doing what, and who doesn’t like something anymore.” Is the way that individual Facebooker is using the Facebook “social utility" to better understand the world around him representative of the typical ways Facebookers engage with the site?

His comment doesn’t tell me how he is using the site necessarily.

We just did a major revamping of the site, how it raises information to the users. The reaction was the same as would happen if someone woke up one morning to find the email program he is used to using everyday was all of a sudden organized differently, without having any instructions, with no idea how to interact with the new features.

The News Feeds and Mini-Feeds didn’t make information public on the site that wasn’t already public. Within two days we added privacy controls and within 48 hours the feedback had changed dramatically. 

Follow-Up: Did the public “protest” reaction to the Mini-Feeds and News Feeds represent the reactions of a majority of users? 

We have over 10 million registered users, 750,000 is a small percentage of the entire user base. Many groups actually embraced the new features.

Follow-Up: How active is your user base? 

Over half of the user base comes back every day, spending on average 16 minutes or more each time.

 2) When Facebook opened its virtual doors to anyone via regional networks the Facebook blog assured students of their continued exclusivity by saying that “Friendship on Facebook is, in and of itself, a privacy setting.” MySpace has a different stance on friendship, Tom Anderson is everyone’s friend, and the social networking site believes its open friendship policy is a competitive advantage. Why is Facebook’s “confirmed friendship” approach better? 

MySpace and Facebook have two fundamentally different approaches to social networking. MySpace is more of a media portal and they are doing a good job. Facebook is an authenticated network where people interact with their real friends, based on real relationships and the real world around them.

By authenticating people, it enhances real world relationships. We also give users granular privacy controls. 

Follow-Up: How will users know if other users are “real” in the new regional networks that do not require authentication? 

Regional networks encourage a similar type of behavior. A user can only be registered in one region at a time, they chose the region that is most relevant to them, changes are limited to every few months, like in the real world. 

Follow-Up: Can a user register several times by using multiple email addresses?

Potentially. 

3) At Advertising Week, Mike Murphy presented Paramount Classics’ sponsorship of an “Environmentally Conscious” Facebook group to promote its film “An Inconvenient Truth” as a “best practices” example of  your “active sharing” brand sponsorship model. In such a model, Murphy indicated that click throughs are not the measure of success, the number of times a brand message is shared between Facebookers is the measure of performance. How does Facebook track the forwarding and sharing of sponsors’ messages? Is disabling of such tracking a privacy setting for Facebookers? 

We have three advertising models.

1) Microsoft is the exclusive provider of banner ads and sponsored links on Facebook. Microsoft is a technology company and is a good partner for the integration of that kind of relevant advertising.

 2) “Sponsored Groups,” which Mike spoke about (see “Facebook on social media: ‘active sharing’ boon to brand marketers online”).

3) Our new “Sponsored Stories” ad product which will be placed in a user’s News Feed. We will be launching “Sponsored Stories” in a few weeks, the ads may be text and can include photos. If a user clicks on the ad and then joins the advertiser's group, the user’s friends are alerted about the friend joining the group, viral spreading is what 18-24 year olds like to do.

We don’t disclose personally identifiable information about any of our users to any advertisers. 

4) Mark Zuckerberg and Chris Hughes recently held an online press conference for college newspapers. When asked if they were making changes to the site “only for the money,” Zuckerberg said “Running a site that does this much traffic is expensive, so we need to make a bunch of money just to be able to pay for it.” Are Facebook’s revenues greater than its expenses? 

We are extremely happy with our revenue streams and growth and are doing quite nicely. 

THANKS MELANIE!

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