Facebook said it expects branded firms to increasingly dedicate a portion of their advertising dollars to the social media site as it revealed plans to raise $5 billion in an initial public offering.
The company said branded firms are using the site because the “broad audiences they are trying to reach are active on Facebook on a daily basis, because we can reach their desired audiences with precision, and because they can spark word-of-mouth marketing through Facebook.”
That disclosure was made in a regulatory filing Wednesday night with the Securities and Exchange Commission.
Facebook is becoming increasingly important to the retail and fashion worlds as they aim to connect with consumers in new ways. Facebook commerce has been tried by several brands and retailers, with mixed success, but “social commerce,” which uses sites like Facebook for friends to recommend products to other friends, is expected to become a major driver of sales from this year on.
The firm noted that traditional off-line branded advertising accounted for $363 billion, or 62 percent, of the total advertising market in 2010. Showing the growing importance of social media, Facebook cited as an example Nike, which launched its “Write the Future” campaign on Facebook as part of its 2010 World Cup marketing effort. Facebook said the placement was seen by 140 million users in 20 countries, and users “engaged with the message more than seven million times by taking actions” such as watching the embedded video or liking, clicking or commenting on the ad.
In the area of display advertising, such as banner ads, the company noted that Wal-Mart purchased advertising on Facebook targeting U.S. users between ages 18 and 49 during the period of Black Friday in November. It said that campaign, which encouraged users to download a Black Friday shopping map of their local Wal-Mart store, reached 60 million Facebook users.
Facebook also said it had 845 million monthly active users in 2011, compared with 608 million in 2010. The company expects to trade under the symbol “FB.”