Microsoft and Facebook - Here to Serve You

Microsoft and facebook just announced an enhanced alliance to offer global advertising on facebook via Microsoft's Digital Advertising group. This will allow advertisers to reach a portion of the more then 40 million facebook users. Originally Microsoft entered into a partnership with facebook in August 2006). At that time, Owen Van Natta, chief operating officer of Facebook said

“We’re excited to be innovating with Microsoft to build a world-class advertising solution that allows Facebook to deliver the best advertising experience in social media,” “We chose Microsoft because it, like Facebook, is a technology company at its core and is committed to taking a fresh approach to targeting advertising to social media. We’re committed to providing a great user and advertiser experience together.”

Microsoft according to media sources is investing $240 million into facebook for a 1.6% stake valuing facebook now at $15 billion dollars.

Here are the demographics of the facebook world today according the Microsoft's Partner profile for facebook.
General Audience Stats:

* 41 million active users1
* 55,858 work, college, high school, and geographic networks1
* 6th most trafficked site in the U.S.2
* 2nd most trafficked social networking site2
* 50% female / 50% male2
* 36% have college as their primary network
* 16% have high school as their primary network
* 20% have work or geographic region as primary network
* Ages 18-34 (37.7%)2


Engagement Stats:

* 19 average visits per month2
* 178.6 average minutes per month2
* 50% of active users log on daily1
* 2.3 average visits per usage day2
* 21.7 average minutes per usage day2


1. Internal data, August 2007.
2. ComScore, August 2007



* Some of the more interesting stats are that there are 55,000+ networks in facebook.

* 50% of active users log in daily

* Only 37% of users are in the 18 - 34 age range. This shows the demographic shift since facebook opened up its platform

* The average user is here about twenty minutes a day Given a large % of users are on for a much longer time than twenty minutes, does that mean there is a large group which is hardly on at all.

Now, here are some of the questions which would be of interest:
1) Are these advertisements going to be shown to facebook users based upon their behaviors or just based upon their demographics.
2) Will this allow larger advertisers to become more interested in marketing into facebook?
3) Since Google was the primary ad network for small to mid-size business, will those businesses abandon google's ad network to advertise via Microsoft? I ask this question due to limited resources of smaller advertisers.

Again there may be some risk inherent in this strategy to align with Microsoft versus Google. However, it seems that the cash that Microsoft is investing up to $250 million to compensate for the ad network.

In the end, these two companies may just need each other. This alliance prepares them for longer battle with Google in the social media space.