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Whether they love the Sony PlayStation or hate it, there's no shortage of discussion groups for gamers on Facebook, the online social networking sensation taking Canada and the world at breakneck speed.
Among the 500-plus groups Facebook members can join, there's the functionally named “Playstation 3” group (three members), the hostile “DEATH TO PLAYSTATION 3” group (48 members) and the girlfriend-dominated “PlayStation 3 has ruined my sex life” group (nine members).
Then there's the “PlayStation Canada” group, paid for by Sony Corp.'s Canadian marketing team, at a whopping 27,335 members and growing.
It's an early Canadian example of the strategy Facebook Inc. is betting on in an effort to turn its unfathomable growth in users – up 3 to 5 per cent a week – into a similar growth in revenue and profit.
Until seven months ago, Facebook's revenue strategy focused on banner ads, through partnerships with Microsoft Corp. and marketing conglomerate Interpublic Group.
But in September, Facebook began allowing marketers to set up sponsored groups, where they can place ads, run contests and lead discussion topics in an effort to build a continuing two-way dialogue with their most loyal consumers.
“We decided from a revenue perspective that banners were the best way to monetize the site as we were growing,” said Mike Murphy, vice-president of media sales at Palo Alto, Calif.-based Facebook Inc.
“What we found is that in order to allow marketers to leverage the benefits that a social network can deliver, we needed to include integration and sponsored content as part of that so that marketers could create a daily dialogue with their most passionate users and have a feedback loop about how they engage.”
Facebook, a private company valued in the billions of dollars, will not disclose exactly how its revenue is split between banner ads and sponsored content.
The social networking site is betting that sponsored brand content will be the biggest driver of future revenue growth, but Mr. Murphy says there are no guarantees.
“It's so hard for us to predict, based on the historical data we have right now, which model is going to bring in the lion's share of the business,” said Mr. Murphy, 45, who reportedly took a 50-per-cent cut in pay when he left Yahoo Inc. for Facebook a little more than a year ago.
Mr. Murphy said that in Canada, sales of banner ads still accounts for most of its revenue. Facebook's Canadian sales partner, Segal Communications, has completed only the PlayStation deal for a sponsored Facebook group in Canada but has several more projects in the works.
At yesterday's count, there were 100 sponsored groups on Facebook (mostly American), but Mr. Murphy expects that number to grow into the thousands as marketers rush to embrace the potential of social networking sites.
Facebook works by allowing users to set up personal pages. They can post pictures, join interest groups, link to friends' pages and post messages on other pages.
Marketers from Research In Motion to Burger King have used the free tools available on social networking sites like Facebook rival MySpace to access consumers.
Facebook doesn't try to prevent companies from using its site in that way. But Mr. Murphy's pitch to marketers is that they will have much better results if they pay to take their branded content to the next level.
Marketers pay for the ability to advertise their groups in “news feeds” alongside user updates on what's going on with their friends. Pricing is based on how many consumers see the newsfeed item, irrespective of how many users actually join a sponsored group. Marketers can also define the parameters about who gets their message – male university and high school students living in Canada, for example.
Marketers behind sponsored groups also have the ability to delete posts or discussion topics they don't like, though Mr. Murphy says they're often better off leaving negative comments on the board.
In sponsored groups for such brands as H&M, Starbucks, Virgin Mobile and PlayStation, the loyal brand devotees are often quick to attack those who have negative things to say about “their” brand. Mr. Murphy says the response is evidence of the power of marketing through social networking sites.
“If you have some user who makes a comment that ‘Nintendo is better than PlayStation,' typically that passionate group who has joined the Sony PlayStation group protects and defends that brand vigorously,” Mr. Murphy said.
“It almost turns that one negative comment into 20 positive ones.”
