The power of Facebook for business

In 2004, the social media buzzword was “friends,” people with whom college and high school kids connected on Facebook.

Fast-forward seven years. And the new F word of the day is “fans,” that vast audience of existing customers and potential clients using Facebook. A stand-alone website is no longer adequate, social media experts say.

Facebook in February introduced an array of tools, and rules, for business users—and continues to update the tool kit. It’s never been easier to create a page and keep it up-to-date with sweepstakes, coupons, videos, surveys, how-to slide shows and other utilitarian service content that will bring a devoted following—and the business to justify it.

And if your business doesn’t have technical coders in-house to create these riches, consider hiring a social media Facebook expert or one who will take the time to learn—some savvy students fresh out of college have the skill set at a great price; they know Flash, Photoshop and other software—or retaining one of the dozens of companies that fit your niche. A simple Google search will land you sources.

A practical reason for retaining an expert: “Facebook is changing its rules all the time,” said Jay Schwartz, CEO of IdeaWork Studios Inc., a branding, advertising and graphic design firm in New York. IdeaWork was retained by Crunch Fitness in 2009 to develop its Facebook presence. “You want to focus your attention on running your business, not on the rules of Facebook.”

Experts say companies cannot afford to ignore Facebook, which has more than 750 million users. The number of Facebook users in the United States will increase 13.4% in 2011, estimates The eMarketer Daily Newsletter, after 38.6% growth in 2010 and a whopping 90.3% rise the year before.

“A Facebook presence is the must-have way to build a brand,” said Bradley Bailyn, marketing manager for FirstPageSage Inc., a search engine optimization and social media marketing firm with offices in California and Manhattan. “That’s because Facebook isn’t a stop-here-and-leave premise. It’s a way to engage people who, in turn, engage all their friends with your brand. Facebook enables you to target consumers in a way you could only have dreamed of doing before.”

And consider this: Once a customer “likes” your business, if even a tiny fraction of that customer’s “friends” in turn take a look at your page and “like” it, that powerful brand builder, the multiplier effect, will kick in—and fast. Say each visitor to your site has 500 friends. If 1% of those 500 “like” you, that’s five people, who each have 500 friends apiece, too. Now 2,500 people will know about your site.

Here, Christina DeGuardi, vice president of marketing at Manhattan-based Crunch Fitness, which operates and franchises 31 fitness centers in 11 major markets across the United States, answers questions about what Facebook has meant to its 2,000-employee business.

Q. When did Crunch begin using Facebook?

A. Several years ago, when the social media boom hit. … Facebook has become an absolute necessity in staying relevant in our industry. Consumers want information at their fingertips. … Facebook also allows our fans to feel like they are a part of something; a feeling of community, which only makes our brand and overall member experience stronger.

Q. How has Crunch used Facebook?

A. To create a community and forum for our fans and members, to communicate and promote our offerings and programs, to increase brand awareness, and as a new medium for marketing. …. We’ve also rolled out multiple Facebook tabs providing users with information about our locations, class schedules and links to download a guest pass and our mobile app.

Q. What has been the most successful thing Crunch has done on Facebook?

A. We’ve had some great success with our recent Sponsored Stories [Editor's note: Facebook allows businesses to pay to have customers' interactions with the company show up on the Facebook pages of their friends.] It’s been beneficial in pushing out our newly created tabs, and in turn in generating leads and membership sales via guest pass downloads.

Q. How was that success measured?

A. In our business, it ultimately comes down to garnering leads and selling memberships. We can easily track our guest pass downloads and show that our Facebook tabs and addition of Sponsored Stories have garnered an impressive amount of quality leads, driving traffic to our gyms.

Q. What have been some other metrics that show Facebook’s success for Crunch?

A. As we all know, it’s difficult to quantify the success of online and social media initiatives. However, we gauge the success of our efforts through the increase of our fan base, fan engagement, percentage of impressions and positive versus negative posts and comments.

Q. What else has Crunch done on Facebook that has worked?

A. Crunch is rolling out a campaign for the month of October called Gymspirations. The campaign will be housed on a Facebook tab and highlight the amazing successes of our members. Our members will be able to submit their inspirational stories, which will then be posted and shared on Facebook. A winner will be selected and the member and trainer will receive all-expense-paid trips to Hawaii. … We are also rolling out a charity check-in campaign for the month of October. We will raise money via Facebook check-ins to support a charity while garnering check-ins at our local studios via Facebook Places.

Q. What hasn’t worked?

A. We’re constantly testing and monitoring our Facebook posts to see what our fans “like” the most or comment on, negatively or positively. We do know that our members engage the most when we post questions and content about our classes and instructors.

Q. Can Crunch track growth in the number of Facebook fans?

A. Currently, Crunch has over 17,000 fans. In the past last year, we’ve seen an increase of over 10,000 fans, which means we’ve more than doubled our fan base in just one year.

Q. How much money is Crunch spending on its Facebook business pages per week, month or year?

A. Our Facebook spend is wrapped into our entire marketing budget and changes depend on campaigns and marketing initiatives. [Editor's note: Facebook allows businesses to set dollar limits on their campaigns and uses an auction system that determines how much per click a business pays to reach its target audience.]

Q. Who is doing the work to build out Crunch’s Facebook pages?

A. Crunch uses IdeaWork Studios to build out our pages and Facebook tabs. IdeaWork is extremely familiar with our creative initiatives and our technical processes, so any leads gathered are seamlessly funneled into our existing systems. ….

Q. Does Crunch feel it can bring this work in-house?

A. Crunch manages [posting on] Facebook pages in house, … but Facebook is always changing how they do things, what things look like and all of the privacy issues. If we had to devote our internal resources to always keeping up with Facebook’s changes, we wouldn’t be as effective or as efficient as we are.

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Exclusive: Facebook doubles first-half revenue

By Alexei Oreskovic

SAN FRANCISCO |
Wed Sep 7, 2011 8:19pm EDT

SAN FRANCISCO (Reuters) – Facebook’s revenue doubled to $1.6 billion in 2011′s first half, a source with knowledge of its financials told Reuters, underscoring its appeal to advertisers while it grapples with intensifying competition from the likes of Google Inc.

Net income in the first half of 2011 came to almost $500 million, according to the source, who wished to remain anonymous because privately held Facebook does not disclose its results.

Facebook’s stronger results come as investors have pushed its valuation to roughly $80 billion in private markets, with many industry observers expecting the world’s No. 1 Internet social network to go public in 2012.

Its growing popularity among advertisers and its 750 million users has pressured entrenched Web companies such as Yahoo Inc, which ousted its chief executive Carol Bartz on Tuesday.

“We really see Facebook as becoming like the operating system for delivering ads on the Internet,” said Dave Williams, the CEO of Blinq Media, which runs ad campaigns for companies on Facebook.

Search leader Google Inc launched Google+, a rival social network in June that attracted more than 10 million users in its first two weeks. Google has yet to offer ads on its social network, but it is trying to increase Google+’s appeal to consumers by offering games such as Zynga Poker and Rovio’s Angry Birds.

Some venture capitalists and industry experts see early signs that Google+ is headed down the right path in taking a bite out of Facebook.

FROM DORM ROOM TO MARKETS

Facebook earned $355 million in net income in the first nine months of 2010 on revenue of $1.2 billion, according to documents that Goldman Sachs provided to clients during a share offering this year.

The source did not provide figures for a direct comparison for the first half 2011 figures.

Created by CEO Mark Zuckerberg in a Harvard dorm room in 2004, the company is expected to introduce new features this month such as music services from Spotify and Rhapsody, according to people familiar with the plans.

Facebook has become one of the Web’s most visited destinations by people who spend hours on the site every month sharing photos and videos, and conversing with friends.

Facebook accounted for nearly one-third of all Internet display advertisement impressions in the United States in June, more than the combined total of Yahoo, Microsoft Corp, Google and AOL Inc, according to analytics firm comScore.

Large brand advertisers as well as local businesses are increasingly spending marketing dollars on Facebook, drawn by its vast number of users and the ability to target ads to consumers based on their interests, said Blinq Media’s Williams.

Facebook’s social network, in which users endorse products and companies by “liking” pages, provides a treasure trove of valuable data that other online services can’t match, he said.

“Companies like Yahoo are relying on third party user behavioral data based on things like cookies. On Facebook that’s data that users have revealed about themselves,” he said.

Facebook’s increasing allure to marketers has helped boost the rates for its ads. The price that companies pay for every consumer that clicks on a Facebook ad increased 62 percent between the fourth quarter of 2010 and the second quarter of 2011, according to Efficient Frontier, another firm that helps companies deliver ad campaigns on Facebook.

It was not clear what portion of Facebook’s $1.6 billion in revenue in the first half of the year came from advertising sales. Facebook also gets a 30 percent cut of sales of virtual goods, such as digital cars or animals, that enhance the experience in social games such as Zynga’s FarmVille.

In January, Facebook said it had raised $1.5 billion from investors including Goldman Sachs and Digital Sky Technologies, as well as through a private offering to overseas investors conducted by Goldman Sachs, at a valuation of roughly $50 billion.

Facebook declined to comment on its financial results.

(Editing by Edwin Chan, Derek Caney and Richard Chang)

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