In Depth: Discussing Facebook’s Advertising Future with VP of Global Sales Mike Murphy

Facebook’s advertising efforts have come a long way in the last four years. While many companies have had to abandon advertising-focused revenue models, Facebook has grown total revenues to around $550 million this year, with about 90% of its revenues in our estimation coming from advertising. That’s up an impressive 70% year over year overall, as CEO Mark Zuckerberg said earlier this year.

Today, over 80% of America’s top 100 brand advertisers by total spend are active on Facebook, and Facebook says the number of total advertisers using its performance system has tripled so far in 2009. (It won’t say how many there are, but Facebook told us there were “tens of thousands” of advertisers back in January.)

We sat down with Mike Murphy, Facebook’s VP of Global Sales, to talk more in depth about the state and future of advertising on Facebook – not only for brand advertisers, but for performance marketers, developers, and affiliates as well. Murphy joined Facebook in early 2006, and today runs the global direct sales organization, including all of Facebook’s offices outside the US.

Justin Smith: Facebook’s advertising products for brand advertisers have evolved significantly over the past couple of years. How would you describe what’s changed?

Mike Murphy: I joined the company almost four years ago, and what we had then were IAB banners that were like most of what was on the rest of web. We realized quickly that the better we did to display advertising as part of our product, the better we delivered value to our users and advertisers. So we’ve been really focused on developing ad units that include social context so that they feel more like the rest of the content on Facebook. You can see that both on our engagement ads and performance ads today.

On the Pages side, what has become Pages today was actually originally sponsored groups. What we learned over time was that the more a Page became like a profile, having brands think more about publishing content than managing a group, the better it was for the brand. We’re constantly iterating on the Pages product, so that the way Pages work as part of the Facebook ecosystem is more streamlined and less confusing.

Earlier this year, Facebook redesigned Pages, giving them the ability to publish to the stream. How are brands reacting?

Different brands are using Pages differently. Some of the more innovative brands are publishing regularly and finding their way on what the best sequences of messages should be. What they’re finding is that publishing interesting objects or content and only making some percentage of them commercial in nature is necessary to make it feel like a relationship. That needs to be budgeted.

We’re helping big brands and agencies find the right balance between commercial and non-commercial messages. It really varies by category, and they’re learning as they go. We have 1.4 million Pages right now (but we don’t talk about what percentage of those are commercial).

Ultimately for a brand, a Page on Facebook is a presence that’s part of the experience. The promise of the web early was to develop a two way dialogue between a brand and a consumer. In the early days of the web that took the form of a microsite. Pages allow brands to have presence inside Facebook, which allows the actions fans to have organic viral value to their friends.

Why haven’t some brands created a Facebook presence yet, and what are you telling them?

There’s such a broad spectrum of brands, from the forward learning to the conservative. Many in the most conservative group still feel like they have a choice of whether they want to take participate in social media in general. What helps that group is that when they understand that their brand is here whether they participate or not, and they have an opportunity to shape that messaging, they get interested.

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