Sean Bruich, Facebook's head of measurement platforms and standards, believes the new tools are paying off.
"What we can see conclusively a year after the IPO is that ads on Facebook really do help drive people into the store and help them make purchasing decisions, help influence their purchasing decisions," he says.
A recent Nielsen analysis found that consumers are 55 percent more likely to recall "social ads" than traditional online ads.
So powerful is Facebook's new analytic arsenal that privacy advocates are growing concerned about the potential intrusiveness of merging consumers' online and offline experiences.
People "are getting served ads based on things they didn't put on Facebook and maybe wouldn't be comfortable putting on Facebook," says Rainey Reitman, activism director at the Electronic Frontier Foundation, a nonprofit civil-liberties firm. Facebook says mechanisms are in place to protect privacy.
"We've never had anything like Facebook," Reitman says. "We've never had an entity that was able to collect so much information on so much of the world's population, ever."
Advertisers aren't complaining.
"Anywhere that more than a billion people spend time with their friends each month is extremely valuable to us," says Brad Ruffkess, connection strategist at Coca-Cola.
At Procter and Gamble, the world's biggest advertiser, "we saw almost from the start that social media is the world's largest focus group," says Marc Pritchard, the company's global brand building officer.
Both companies are important advertisers on Facebook and members of the company's client council, a group of more than a dozen brands and ad agencies that have met regularly with Facebook executives since 2011 to talk about advertising and marketing on the site. Other members include Unilever, AT&T, Walmart and GroupM North America, a subsidiary of advertising agency giant WPP.
Still, some advertisers remain skeptical. Ryan Holiday, director of marketing at American Apparel, is critical of Facebook's "sponsored stories." These are messages from marketers that are interwoven into users' news feeds. He says the clothing company spends less than 10 percent of its online advertising budget with Facebook.
One thing is increasingly clear: The future belongs to mobile advertising. And just a year ago, Facebook warned investors it was behind in capturing this market. In response, Facebook retrained engineers and rebuilt its mobile applications, which users complained were clunky. Now, there's an explosion in the number of ads shoehorned in between status updates and cat photos.
"The transition to mobile happened even faster than we believed," says Carolyn Everson, vice president of global marketing solutions at Facebook.
In the first three months of 2013, Facebook generated $375 million in revenue from mobile ads, about 30 percent of its total ad revenue. That's impressive given that Facebook had no mobile ads at all just a year ago.
And there's room to grow. Research firm eMarketer estimates that U.S. mobile advertising spending will grow to $7.29 billion this year, up fivefold from 2011. Facebook is expected to capture some 13 percent of the market, a distant second behind Google at nearly 55 percent, according to eMarketer. By 2015, the mobile ad market is expected to hit $16.2 billion.
Facebook's stronger grasp of mobile advertising helped get General Motors back.
"Mobile was something GM was particularly passionate about," says Everson, who joined Facebook two years ago from Microsoft Corp., where she headed global ad sales.
Everson says she sees Facebook as a future advertising empire. The goal is to help companies achieve so-called cross-platform marketing and target people with ads wherever they might be — in front of smartphones, tablets or TV sets.
"A lot of people might argue that TV is the first screen and mobile is the companion screen," she says. Her take: Mobile is now the first screen. And Facebook's hope is that advertisers will soon see it this way, too.
"Your customer is walking around with the most personal device they've ever had every single day, checking it 12 to, you know, more than 24 times a day depending on the market," Everson says. "This is a mass medium."
At the end of last year, 87 percent of Americans owned a cellphone and nearly half owned a smartphone, according to the Pew Internet & American Life Project. Worldwide, research firm Gartner puts the size of the mobile phone market at 4.4 billion, enough to give one phone to nearly two-thirds of the world's population.
Of course, television still accounts for the biggest slice of worldwide ad spending, and nearly 96 percent of American households own a TV set. ZenithOptimedia, a forecaster owned by the ad agency Publicis Groupe SA, says television accounted for 40 percent of worldwide ad spending, compared with the Internet's share of 18 percent. By 2015, the Internet is expected to grow its share to more than 23 percent, but largely at the expense of newspapers and magazines. TV is expected to hold steady.
"On any given day in the U.S. alone, you can reach 100 million people on mobile," Everson says. "Those numbers are not seen across any TV or print opportunity. I think it's going to take hold, this message."
Find Barbara Ortutay on Twitter at https://twitter.com/BarbaraOrtutay
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