In March of last year, just as market watchers Hitwise and comScore reported that Facebook overtook Google as the most visited website for the first time, Facebook also stole one of Google’s top ad executives: David Fischer. The former deputy of Facebook COO Sheryl Sandberg at Google and a onetime editor at U.S. News & World Report, the 37-year-old Fischer left a job spearheading the search giant’s local ad effort to become Facebook’s vice president of advertising and global operations.
Despite his sales background, insiders say Fischer was a good fit with Facebook’s geek culture. At Google, “he made (sales) people in an engineering culture feel that they were valued,” says David Scacco, Google’s first ad salesman and now chief revenue officer at MyLikes, which pays celebrities and other online influencers to promote ads on social sites. And despite a modest demeanor in public, he was known for sometimes cutting loose, dressing up as Ozzy Osbourne and singing ‘80s songs at sales conferences. That said, he’s clearly a sales guy: In a 50-minute interview, he used the word “opportunity” or its plural 58 times.
In this edited interview for my story on Facebook’s advertising strategy in the latest issue of MIT’s Technology Review magazine, Fischer talks about how Facebook hopes to transform marketing into “the most useful thing on the page.”
Q: What’s your vision of advertising, and how can Facebook make that happen?
A: The Web is being rewritten around people. There’s this transformation that’s happening from an information Web to a social Web. Once the Internet was great for answering questions like “What is the weather going to be like in Cambridge tomorrow?” and “What flights can I get from Boston to San Francisco?” It wasn’t so good at aggregating information about the way we actually live our lives, which is people.
If I’m planning a vacation with my family to go to Mexico, I can read a bunch of anonymous reviews, but the reality is I turn to my friends who have just gone to Mexico or been there a bunch of times and say, “Hey, I’m thinking about a trip, where should we stay or what should we do when we’re there?” When you rebuild the Web around people, you take the social graph and actually enable those connections to happen, you suddenly open all of these opportunities to put people at the center of marketing.
Q: What does that mean for advertisers?
A: Several things. It lets brands really build themselves and connect to people in a way at scale to enable a two-way dialogue. So it’s not just about me as a brand talking at you, it’s about me talking with you and actually having the chance to hear back from you and respond.
The second piece is about making your customers your marketers. If I “Like” a brand–I’m a skier, so whether it’s the mountain I like to ski at or my new Rossignol skis or I’m going up to Squaw Valley next weekend–those kinds of actions, it’s that connection. So it’s not just about Squaw saying, OK, David is someone who is passionate about skiing, I have the opportunity to market to him, it’s actually the opportunity to say, OK, David is passionate about skiing, probably a lot of his friends are passionate about skiing–which happens to be true. So when he comments on Squaw, that goes to all of my friends, on average 130 friends, it’s not just about Squaw talking with someone, it’s about your friends talking about a brand they care about.
That, we think, is a key innovation in marketing: the opportunity to leverage word-of-mouth marketing. In the marketing world, people always talk about how word-of-mouth marketing is the most effective marketing there is, bar none. Now you have the opportunity to do that on Facebook, and to do that at massive scale that was simply unavailable to you before. That’s the revolution that we think is happening today on Facebook.
Q: Is the goal to rewrite the Web around people completely?
A: Absolutely. We really believe that rebuilding the Web around people and the social graph is in the process of remaking some industries and will remake more of them over time. If you go back a few years to Facebook Photos, when we introduced that product, it did not have any of the feature set that the incumbent players had. You couldn’t even rotate the photo, it didn’t have red-eye reduction, you couldn’t click to print down the street. It had what no one else had: It got shared with my friends and it got shared with your friends. Just that feature of making photos social and built around people, we quickly skyrocketed to the most popular photo site out there.
Same with Zynga: They build deeply immersive social experiences. You can’t play any of their games without constantly interacting with your friends who are also playing the game. And it creates incentives for you to interact with your friends. So it has this real viral component.
We think that kind of dynamic–industries being remade around social experiences–is going to happen more and more. So you think about the Huffington Post, what they did was basically make news social. The comments are focused on what your friends have seen and they made it really easy to share every story.
Q: Big marketers think of scale in terms of television’s numbers, and while Facebook has more than 600 million users, there are only limited ways to reach all of them at once. When you talk about scale at Facebook, do you mean something different?
A: People are spending more time on Facebook than any other online property, actually three times the No. 2 site–close to 7-1/2 hours a month on average right now. And when you’re on Facebook, you’re leaning forward, it’s not just a sit-back-and-watch experience, you’re leaning in, you’re seeing what your friends are doing, you’re commenting, and it’s an engaging experience.
So for many of the largest brands in the world, who are big TV advertisers, who might typically advertise in the Super Bowl or on American Idol, where they want to reach a really large audience at once–maybe they’re releasing a new car, or have a new product coming out and just want to reach a really mass audience–Facebook presents that opportunity. We have our premium ad space that shows up on our home page, and that really presents you an opportunity to reach a huge audience.
At the end of the day, every marketing activity at the end of the day is about driving sales. You can target [on Facebook] in really specific ways, around people’s interests, around where they live, around age, around gender. So you can go really narrow, and for many marketers, that’s very powerful and that’s where they want to go.
Q: Marketers view Facebook as offering very limited opportunity in terms of creative ad formats.
A: We heard that feedback a lot a year or two years ago. We don’t hear that so much anymore. We’re really thinking of Facebook as a platform and an opportunity to build connections and then leverage those connections. That premium ad is really valuable, but what you do out of that is you build awareness, you build connections, you build the opportunity to relate to someone to tap into their friends. So there are a lot of opportunities. We’re seeing that a lot of the biggest brands are engaging in pretty deep ways on Facebook.
So for example, the Ford Explorer last year, for the first time, instead of releasing a new car model at an auto show in Detroit or Munich, they revealed that on Facebook, because they had the chance to reach millions more people than they would attendees at an auto show. It wasn’t just that they could target auto enthusiasts or people who had Liked Ford, they had the opportunity to tap into all those people’s friends as well. So say Rob likes Ford, here’s the new Ford Explorer and you build in that affiliation that comes with it.
Q: How typical is that?
A: We see many, many examples like that. We’ve partnered with Nielsen to enable them to do a lot of research around these brand metrics, which is what a lot of the largest advertisers in the world. Of the Ad Age 100 advertisers, the biggest brands, 92 are on Facebook. With Nielsen’s BrandLift, they’ve studied the impact of seeing your friend’s name in an ad, seeing that your friend likes a product. What they’ve found is a 68% lift in people remember that they’ve seen that ad, 2X in terms of recall of that ad message, and 4X in terms of purchase intent, as a result of seeing a friend’s name in those ads. Those are really significant metrics.
That really speaks to word of mouth marketing at scale and the power that brings to the table. And then you layer on top of that the benefit of those connections. Suddenly, that paid [advertising] is really leading into all sorts of opportunities in owned and earned media, continuing to publish into people’s news feeds on an ongoing basis. There’s a huge multiplier effect. So all that is really powerful.
Q: So the multiplier effect is more important than the ads?
A: In terms of ads themselves, we’re very comfortable. We think that the format, while it’s not splashy and doesn’t expand and take over the home page, we actually think that’s better for users and better for advertisers. We are trying to create an advertising experience, a marketing experience, that’s consistent with the rest of Facebook and what is driving users to Facebook. At the end of the day, ads that engage users the same way that they’re coming to Facebook to be engaged is good for marketers. So we think that this is actually a win-win in time, and the fact that the ads look a little different and aren’t what you’re seeing elsewhere is an asset.
Q: What’s the value of a Facebook fan to a brand?
A: These fans are a means to an end. It becomes the opportunity for Starbucks with 20 million fans to reach out to that coffee audience. Like when they’re going through a rebranding and new logo, they have an opportunity to reach out, they do things like free pastry day when they’re trying to drive foot traffic into stores. When they did that last year and promoted it just on Facebook, they saw a 94% increase in traffic to the stores as a result of that.
If you take the multiplier effect of all of those friends of those 20 million people, you actually have the opportunity to tap into hundreds of millions of people, nearly half a billion. We’re seeing brands come around to that.
Q: Any examples?
A: Nike in the last World Cup, with its Write the Future campaign: A three-minute video, which was brilliant creative, really well-done, but they did a couple of things really smartly. One, they launched it globally, 20 markets, right before the World Cup. Very quickly, in a 24-hour period or so, they built up 3 million connections. They had 6.5 million video views out of it and billions of impressions out of it.
Another example from late last year was American Express’ Small Business Saturday. They ran advertising on TV, in newspapers, on Facebook, elsewhere online. But all of that marketing drove people to Facebook to connect to the Small Business Saturday page. And then they created incentives. They actually gave free advertising on Facebook to 10,000 of their small business customers. And they gave American Express cardholders who shopped at a small business on that Saturday a $25 discount. As a result, they saw a 27% increase in purchase volume that day relative to a year earlier.
Now they have 1.5 million connections that they intend to continue to leverage. They continue to publish on that Small Business Saturday page even though it was back in November. In the past, a great ad campaign is done, and it’s gone, and then they start fresh with something new. You have the opportunity to continue to build and leverage those connections.
Q: It sounds like paid advertising is just part of the picture in social media marketing. In fact, Randall Rothenberg at the Interactive Advertising Bureau asked Sheryl Sandberg last fall: Is PR really replacing advertising? Is that what Facebook is pitching to marketers as well?
A: That’s right. The way we talk about this is the marketing opportunity on Facebook. That presents itself on the platform in a whole variety of ways. It starts with Pages and the opportunity to build your presence online. If you look at the traffic that a lot of major brands get to their Websites on a monthly basis–Coca-Cola gets about 300,000 people come to their Website every month. They have 23 million people who follow them on Facebook, their free page. And then there’s the opportunity for them to advertise to drive more people to that page.
So it’s really a virtuous cycle–the dialogues that happen there, the advertising, people Liking Coke or commenting on a post that they make and it getting published into their news feeds. So it really is this cycle that builds on itself and speaks to the power of the platform.
Q: The majority of Facebook’s ad revenues appear to come from self-service, direct-response ads from smaller companies than big brands, but your pitch is to the big brands. So it looks like you’re trying to focus on something different from what the majority of your revenues are now. Is the brand opportunity much larger than that majority of your current ad business?
A: The way that we think about this is, we have hundreds of thousands of advertisers from the largest marketer in the world, Procter & Gamble, down to very small local businesses for which it works effectively because of that targetability. And they have very different needs.
To say that we’re exclusively trying to steer in one direction or the other I don’t think is representative. What we’re trying to do is provide the right set of opportunities that enables marketers of all sizes to effectively communicate with their customers and reach and acquire new customers. The beauty of Facebook is that you can do that at all sorts of scale.
So if you’re a new Mexican restaurant in Palo Alto, you have the opportunity to each people in Palo Alto or surrounding neighborhoods. And if you’re one of the largest brands, an automaker, clothing manufacturer, you can reach hundreds of millions of users on Facebook. And we are designing marketing products that let you work at the scale that makes sense for you, from pinpoint targeting to very broad reach.
Q: But the big opportunity for online advertising ultimately is branding, since that where most ad dollars are spent, right? Especially for Facebook, which is often seen as especially valuable for generating awareness vs. the purchase intent of search?
A: In its 15-year history, online advertising has not really delivered to brand marketing in the way that it could. We think Facebook is now changing that opportunity by allowing people to reach broad audiences but to put people at the center of those connections. Now that there’s the opportunity for the very first time to leverage this word-of-mouth marketing at scale, the brand opportunity online is becoming much richer and more compelling.
Q: And not just for big brands.
A: That [branding] opportunity is really there for small businesses too. There just hasn’t been a medium, a vehicle for them to do it. So to pick up that example, the bagel store down the street here… if I’m saying I want to have lunch today off-campus, Izzy’s Bagels wants me to think, Oh yeah, Izzy’s is down the street. That’s brand marketing, just a different kind. It’s not something people have typically thought of as brand marketing, because there was no effective way for them to do it.
Now, suddenly you have this opportunity online to leverage the fact that people are sharing (things) with us about them, which is their locations, their interests, things like that. And then we can allow you to target those people, protecting of course their identity. Suddenly that targetability is there and it’s bringing brand marketing to a much, much broader set of marketers than was ever possible before–expanding that top-of-the-funnel demand generation space.
Q: Marketers are not paying Facebook for a lot of what they’re doing on Facebook, such as fan pages. Are there opportunities for Facebook to monetize activities beyond what we think of as advertising?
A: Pages being a free product and businesses’ ability to have that online presence is really important and really valuable. Yes, we get asked, Are you going to charge for that? or Couldn’t you charge for that? Perhaps we could, but we think it’s more important that we want Facebook to be the social graph that represents the connections and the entities of the world, and businesses are a key part of mapping out the social graph. So we want them to be there. And we’re very comfortable with our model and the way that we’re monetizing through ads is working reasonably well for us today.
In terms of where we might go and how the model will evolve, we’re much more focused on what are those opportunities, how do you tie together that experience, how do you show people the right opportunities at the right time.
So I’m going skiing a week and a half from now. That’s interesting information, not just that I like skiing but that I’m going skiing. Or it might just be information about where to grab a bite at the last minute–it would be great at that point to know what are the new places that friends of mine have chosen and liked around here. There’s all kinds of experiences that you can imagine that will create opportunities. So we tend to think more in the sense of what are innovations that are going to create a better user experience via Facebook and a nice opportunity for businesses. We think if we can deliver those, the monetization opportunities will come.
Q: Where does that faith that such opportunities will arise come from?
A: The faith comes from the really deep belief that we are delivering value for our advertisers and for every dollar they spend, they’re generating a healthy return. We will continue to provide greater value and additional sources of value to them over time. If we can do that, everything else takes care of itself. So as long as we keep our focus on a great user experience, delivering value to the user, delivering value to our advertisers, that’s going to be a very healthy experience, a very healthy business for us.
Q: What do you do on a daily basis?
A: One big part of it is working with our customers and potential customers, the marketing community out there. Big ones, small ones. We tackle them in different ways.
The second big part is internally around our ad products, understanding what’s working effectively for advertisers, where the future opportunities are, what’s the product roadmap. The meeting I just came from before this was about some of the analysis we were doing on feedback from advertisers, where we were going to take the product–what do our marketing products look like, where do we want to take them, and what are the things that are in the works.
And then a third and important part is scaling up our global operations. We just hired our first person in Latin America. We expanded into Asian in the last year. Western Europe, Australia.
Q: How involved in the ad side of the business is CEO Mark Zuckerberg?
A: He’s very involved in the design of the products, be it ad products, be it whatever products on Facebook. So he spends his time more than anything else on products. So when you’re talking about new products, he’s deeply involved. In terms of the day-to-day ads business, he’s less involved. He empowers our team to go do that. He’s not shy about letting us know when he has questions or other pieces of direction.
Q: What do you want to accomplish personally at Facebook?
A: Success for Facebook in the marketing space is the opportunity to really transform marketing, so that you can deliver a great user experience, deliver great value to marketers, but ultimately in a way that puts the right information at users’ fingertips at the right time.
Search provides that at the right time. [On Facebook], there is a right time to be shown an opportunity to buy something and there is a wrong time to be shown, when you’re not really in the market, when you’re really focused on catching up with your college friends whom you haven’t spoken to in five years and you want to look at pictures of their kids and talk to them.
Q: That’s the big challenge for Facebook and social media generally, right? Not getting in the way of what they’re doing.
A: Delivering the right marketing message to the users at the right time in a way that creates value all around, that’s ultimately what we’d like to deliver here. If you do that, it changes the way you might think about marketing: It can be the most useful thing on the page.
A compelling offer that gives you something you’re looking for before you need to go do any work to find that restaurant or that new car or where to go on vacation, that’s incredibly compelling. So you actually have that serendipitous moment of appreciating the quality of that marketing and saying, There’s lot of great and rich content in front of me on Facebook, and nothin’ better right now than that ad that just popped up for me. That’s the kind of experience we want to create.