On Sept. 29, Facebook (Nasdaq: FB), the world's biggest social media site, upgraded its advertising platform, "Atlas," and released it for beta testing.
But exactly what is Facebook Atlas? And why does Money Morning E-commerce Director Bret Holmes say it's going to "revolutionize web advertising"?
We've got your answers...
FB Advertising: Already a $15,152 per Minute Business
Facebook's 2012 IPO was a disaster. The company lost more than half its value within six months of listing. It was priced at 107 times trailing 12-month earnings, making it pricier than 99% of all companies in the S&P 500 Index at the time.
But its rebound - evidenced when the Facebook stock price more than doubled from July through September 2013 - stemmed from advertising.
"Facebook has gotten really good at advertising. It's inexpensive and it's smartly done," Holmes said. "When Google first started, it wasn't good at advertising, and look at them now."
You see, social media companies are legitimate advertising websites, like Yahoo! Inc. (Nasdaq: YHOO) and Google Inc. (Nasdaq: GOOG, GOOGL). And once FB figured out how to monetize its whopping 1.3 billion monthly active users via advertising, it was a game changer.
Now, more than 1 million advertisers are delivering content through Facebook. The company rakes in more than $1 billion a quarter in ad revenue. Annual revenue by year increased from $5.09 billion in 2012 to $7.8 billion in 2013. According to Gizmodo data from earlier this year, FB makes about $15,152 in revenue every 60 seconds, with $2,887 of that coming in as profit.
The amazing thing is, that's nothing compared to what's going to happen when Facebook launches its revamped Atlas.
"The changes to Atlas are going to make Facebook an absolute juggernaut," Holmes said. "How I know that is because every advertiser's first pick, from a return on interest (ROI) standpoint, is Facebook, with its people-based platform and huge user base. Every single one."
Here's why...
Facebook Atlas Knows You Best
Facebook Atlas is going to revolutionize Web advertising for one simple reason: The way people use Facebook inherently gives it an edge.
"Users have a much different relationship with Facebook. FB functions like a family - it knows a lot about you, you're constantly interacting," Holmes said. "Google is more like your neighborhood - it's there when you need it, but you don't need it every day."
The new Atlas capitalizes on the personal nature of FB's site. It delivers people-based marketing instead of content-based marketing.
That makes a big difference in terms of an ad's effectiveness.
You see, Google - a content-based marketer - uses two things to serve people targeted ads: content and search history. While your Web page content and the searches you're inputting are good resources to serve targeted ads, it pales in comparison to the personal data Facebook takes into account.
"For Google ad targeting, it's sort of like trying to define you by the letters you receive in the mail - your L.L. Bean catalogues and whatnot," Holmes said.
Atlas' people-based platform is better.
"Facebook ad targeting is more like interviewing your grandparents, your friends, the restaurants you eat in - all of your daily activities," Holmes said.
If you use FB to log into apps (think Instagram, Pinterest, and Foursquare, to name a few) all that data is game, too. What's more, it's going to allow tracking on mobile - making available huge datasets that weren't accessible before. And Atlas will give advertisers feedback (like what percentage bought a product based on a certain ad that ran on Facebook).
"Facebook is going to be able to start monetizing Instagram. It's going to track and use everything you check into on Facebook geographically, plus both online and offline sales," Holmes said. "I can't even fathom how much that's worth, but it's going to be a lot."
And of course the better the targeting, the more effective the ads.
"Now imagine you're going to that shopping mall, but it already knows the exact three stores you need and when you get there, those are the three up front. That's how the new Atlas works," Holmes said.
And that's why the revamped Facebook Atlas is a game changer for Web advertising - and for Facebook.
Here at Money Morning, we have a penchant for tracking down the best stocks to buy based on independent, thorough research and our seasoned experts' know-how. And right now, we've pinned down two social media stocks to buy that come from China. The country's surging e-commerce industry - expected to be worth $540 million by 2015 - remains virtually untapped, and it's going to send these two picks soaring...
Related Articles: