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Summary:

Amid the furor over Facebook’s handling of privacy settings on the social network, it’s easy to forget that the social network is still growing rapidly as a business. The company says the number of advertisers it is working with has quadrupled since the beginning of 2009.

Amid all the furor over Facebook’s handling of privacy following the launch of its Open Graph protocol at the F8 developer conference — a storm of controversy that resulted in an op-ed piece by CEO Mark Zuckerberg in the Washington Post and the rollout of some new privacy controls — it’s easy to forget that the social network is still growing rapidly. And not just in terms of the number of users, which has likely crossed the half-billion mark by now and shows no signs of stopping anytime soon, but as a business as well. Facebook told Bloomberg today that the number of advertisers it is working with on its platform has quadrupled since the start of last year, and that it doubled its advertising staff last year.

Mike Murphy, vice president of global sales, told the wire service that the company is “very well positioned as people come out of this current economic situation” and has become “absolutely core to marketing campaigns.” Facebook is definitely becoming a substantial force in the world of online display advertising — according to traffic measurement firm comScore, the network became the largest publisher of display ads in the United States earlier this year, passing former market leader Yahoo.

Facebook hosted over 176 billion display ads in the U.S. in the first quarter of this year, comScore said, up from just 70 billion a year earlier. The latest figure gives the social network more than 16 percent of the market. The actual value of those ads in terms of revenue is an open question, however, since industry analysts say ads on social networking sites tend to be priced lower than those on regular web pages (according to the Wall Street Journal, Facebook had $500 million in revenue last year, with the bulk of that from advertising). Facebook has had an ad partnership with Microsoft since 2006, which was expanded in 2007 when the software company acquired a 1.6 percent stake in the social network for $240 million.

Google came sixth in the latest comScore rankings — behind MySpace and AOL — with just 26 billion ads and a 2.4 percent share, but of course it also controls the majority of the global market for search-related keyword advertising. The comScore numbers also include only those display ads that are served on a company’s own domain. Yahoo and Microsoft run advertising networks that display ads through a variety of partners, and Google is building one as well, called AdX. The search company also reportedly just acquired a small ad-buying platform called Invite Media for $70 million, which makes it easy for ad buyers to work with multiple ad networks and exchanges.

Related content from GigaOM Pro (sub req’d): Facebook vs. Open: The Fight For the Soul of the Web

Post and thumbnail photos courtesy of Flickr user Franco Bouly

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  1. On an impression basis, Facebook controls 16% of the online display ad market (which makes sense given Facebook has the largest user base of any site on the web) though Facebook’s share of advertising dollars is significantly lower because the average RPMs on social networks are one to two orders of magnitude smaller than the large destination sites like Yahoo, YouTube and MySpace.

    I think local will be a significant driver of Facebook advertising revenue in the future because of the changes in the industry and the core assets like mobile and Facebook Pages that will enable Facebook to target and serve locally relevant ads to hundreds of millions: http://expostfacto.posterous.com/facebooks-local-ad-opportunity

    1. That’s an interesting point, Tom — thanks for the comment.

  2. John Karanja Thursday, June 3, 2010

    Micheal do you have any idea how much of that is from their mobile platform and from Africa in particular?

    John

  3. John Karanja Thursday, June 3, 2010

    Mathew do you have any idea how much of that is from their mobile platform and from Africa in particular?

    John

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  5. John Einar Sandvand Tuesday, June 8, 2010

    There is one issue that is not so often talked about when it comes to Facebook and advertisers, and that is how inaccurate their demographic figures are.
    In Norway, for instance, Facebook claims that three times as many people live in the capital city than what is the correct number.
    I wrote about it in this blog post:
    http://www.betatales.com/2010/06/09/how-facebook-is-cheating-advertisers-on-the-demographics/

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