Facebook’s Future Lies In Their Sales Team’s Hands

March 9, 2008 | By Marc Porcelli | No Comments »

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I blogged briefly last week about Sherly Sandberg joining Facebook as the new COO. Mark Zuckerberg, Facebook’s current CEO and Founder spoke to BusinessWeek last week about the recent appointment of Sandberg. Our focus in today’s post is the challenges of creating an advertising system that not only make money for Facebook, but which provides value to advertisers. I will tackle a few challenges that I consider significant as an advertiser.

First, to currently work with Facebook directly, advertisers need to spend around $50,000.00 or so within a given time frame. These minimums for most advertisers are too steep, particularly since there is no out. If Facebook is going to turn profitable and attract new advertisers the threshold needs to decrease. There is likely little motivation for this to change as most, if not all, business at this point is inbound.

Secondly, when you have a sales team that deals predominantly with inbound and agency business, motivation to work with advertisers to create sustainable relationships that work for both parties is often times challenging. The sales perception is that it is not worth the time, particularly since there is so much other business to be had that equates to commissions. The problem is that this shortsighted attitude burns bridges, especially with advertisers that can turn into multi-million dollars spenders. A salesperson’s ability to see this huge opportunity is often missed with everything else coming in at once. Ask most people that have worked with Facebook directly what their level of satisfaction was. Most will say they were very unimpressed.

The third and perhaps most important challenge Facebook will have to overcome is the poor nature of conversions on their site. The Sponsored Story placements, which appear in the News Feed sections have high click through rates, but advertisers will pay a significant premium. This is a premium even some branded advertisers may not find particularly appealing. Even with the high click through rates, the value of the users is not particularly strong.

The Sponsored Story placements are great as they are not overly intrusive, as are all placements on the site, but they simply don’t convert. If they did convert we would not see so many remnant network inventory appearing on the site. Facebook needs to work on new placements, particularly at 300 x 250 medium rectangles and integrated text links with a logo that can be placed on the left and right columns of the page.

It is great that Facebook has grown so much, but as this growth slows and the company potentially looks at going to the street in late 2009 or 2010 (as many expect), they need to show that they can make money. They need to create a solid business model that currently does not exist.

In fairness to Facebook, they have been experiencing hyper growth and this can be very difficult to maintain. With Sanberg at the helm of operations, marketing and sales changes clearly are on the horizon.

UPDATE – March 10th: There is an article that appeared today on iMediaConnection.com called, Avoid these Facebook faux pas by Evan Gerber who discuses Facebook’s group pages.