This is Rob Hassett with tellmesomethingidontalreadyknow.com. Today I’m going to be interviewing Charles Lumpkin who is Vice President of Product Management and Innovation at BLiNQ Media.
ROB: Charles, tell me something about your business that I don’t already know.
CHARLES: Well at BLiNQ we do a lot of work around social media advertising, and the largest avenue of social media advertising today is Facebook. Facebook has over 850 million people active on the site every month. Half of those people log in every single day. Over half of those people use mobile devices to access Facebook. And we’re seeing a major transition from PC to mobile devices. And there are millions of sites connected into Facebook by the social graph. So the world is changing dramatically online and just in general. So we like to place ourselves firmly in the middle for the advertising side of things. And that’s kind of what we do over at BLiNQ Media. We do social media advertising, particularly around Facebook at this time, but we’re expanding out.
ROB: You were telling me there were a lot of page views, a significant percentage of page views that are on the internet are on Facebook.
CHARLES: That’s right. About 20% of all time spent online is spent on Facebook, and about 30% of all page views online.
ROB: That’s unbelievable!
CHARLES: Yeah, it’s huge. I mean it’s just amazing to think of this site that was of relatively small value just a couple of years ago, and now it’s a juggernaut.
ROB: Could I put an ad on Facebook myself?
CHARLES: You can, sure. They have a self-service system, and you go in and enter in a credit card number and place an ad.
ROB: What do you do different from what I can do myself?
CHARLES: The differences in what we do is that we have a direct, basically main line connection into their servers through an API. And instead of going in and launching, say, one or five ads by hand, we go out and launch many, many versions of ads in what’s known as a full factorial multi-variant design, so we might have two thousand ads in a given campaign instead of five.
ROB: For one customer?
CHARLES: Yeah. We work with some of the largest ad agencies in the world and work with hundreds of the top consumer brands. But for any particular campaign, what we do there is we go out and we’re launching a whole bunch of different creatives, so different images, different body copy headlines, etc. Then we’ll have a whole bunch of different target segmentations, so we might be targeting people who like beer or cowboy boots or Nascar or they like teenybopper stuff or hip hop or whatever it might be. And so we create large stratifications of targeting and we combine all of that together and create a whole lot of variations of the advertising. And then we go and we actually optimize all that using some algorithms we built here internally.
ROB: How do you know which people to target? Or are you saying that people, if they click on “like” about something are they put in a particular category?
CHARLES: Yeah, that’s right, in a way. A given profile has roughly 200 or more different points that can be used for advertising targeting. Now this is anything from geographics and demographics to likes and interests. Now we’re not talking about being able to identify any particular user. We’ve never, nor do we have the desire, to collect personally identifiable information, but what we’re talking about is things in aggregate, so we know that 50,000 people like punk rock in Georgia, for instance. And we might advertise to that audience specifically.
ROB: And you would not only write your ad copies so that it would be interesting to that audience, you would be picking a product you think they would like, or a service that they would like?
CHARLES: Yeah. Particularly when an advertiser comes to us, and most of the time the big brands have a reasonable idea, who their audience is. And so based on that, we’ll go out and create a plan and recommendations, and we have some other tools to help us understand which audiences will work. So they come to us. We create the plan. But a lot of times we’ll find different segmentations or demographics that are really surprising to them. You know we had a client a couple of months back, a sports bar, and we found that people who like hip hop music love that sports bar. People who support our troops or support very patriotic kinds of things and like those kinds of things on Facebook, were much more highly likely to be a fan of an orange juice brand we work with. So, you see some very interesting corollaries. You know we found one segment for a brand, and it’s like “Women Who Like Manly Drinks”, like the brand, you know. There’s just some crazy stuff that you’ll find out about these different niches that really construct your total brand and your audience.
ROB: And people that are patriotic are more likely to like a particular brand of orange juice than other people?
CHARLES: Considerably more likely.
ROB: What do people who aren’t patriotic like to drink?
CHARLES: I’ll have to run a specific study on that one, Rob.
ROB: Are there correlations between people who like Chic-Fil-A and coke or anything like that?
CHARLES: We can definitely run those kinds of studies, and we do that on a regular basis for our clients.
ROB: And you’ve amassed a lot of data on that already?
CHARLES: We have.
ROB: Are there other companies that do what you do, what BLiNQMedia does?
CHARLES: There are a few other companies that have API access to Facebook. We have different approaches. So you have some companies that were originally search engine and marketing tool companies and they’ve kind of come over and bolted on to Facebook, but they’re not necessarily creating and innovating in the space like they should be. Then you have companies that are analytics companies such as Omniture that come in and they really are looking at things from a statistical standpoint. So we have a handful of competitors, but I’d say we’re one of the top guys in the industry, particularly because of some work we’ve been doing recently.
ROB: Now what advantage does it give you to have an application interface right into Facebook?
CHARLES: It allows us to use computers to do all of the network scale work, and to do all of the data selection and analysis. I remember a couple of years ago when the Facebook advertising program had just come out. Back then there were no tool sets whatsoever to do the automation of ads other than browser scripting where you’re going in and programming your browser to do specific actions which is a major pain . You had to go in and set up ads one by one by hand. It might take you three or four minutes to set up one ad. But in my world, the world of online media, it’s really super important to be testing a lot. You want to be able to advance your knowledge of this client or this campaign, or who their audience or how the Facebook algorithms work or whatever it is. So back then, it’d take you three or four minutes per ad to do it, and so if you wanted to try ten ads, you’re going to be sitting down for 45 minutes, and that’s if you got everything super organized beforehand. Whereas here, we can pop out, 2,000 ads in 15 minutes if we’ve got all the resources collected ahead of time.
ROB: How much does it cost to hire you guys to do the ads? Do you have to be a large company?
CHARLES: We typically work with agencies and brands, and … I’ll have to get with the sales team. I don’t know if they’ve updated those. But we work on basically an insertion order basis. And I remember an insertion order is about five grand.
ROB: And that’s just for one ad to be placed?
CHARLES: That’s for a campaign, to put out lots of ads for a particular initiative.
ROB: Would that be over a 30 day period or a year, or a week?
CHARLES: It would be probably a 30 day period, somewhere between three and six weeks probably.
ROB: Other than Facebook, which social media are most interesting to you guys right now? What do you find that you think has the second or third highest potential?
CHARLES: The one that we’re looking at in particular right now is Twitter. Twitter has a lot of scale. It has about 150,000,000 monthly actives right now. But it’s a totally different beast. We are running some advertisements though there. You know we’re also looking at LinkedIn. And then Google Plus. Google Plus is a new entrant on the scene. They have a lot of users already and pretty quickly at that. I’m sure it will happen because Google’s really good at advertising, but so far they haven’t used Google Plus for advertising purposes, so you don’t see any ads on it.
ROB: And how does advertising on Facebook compare in effectiveness to advertising with search words on Google?
CHARLES: Sure that’s a good question. So it’s a totally different kind of thing. In search, people are expressing their intent. So if you go out and want to buy some patio furniture, you type in patio furniture or lawn furniture or whatever, and then people advertise to you. You go to their sites, and you’re able to potentially sell them something, but it’s a lot closer to the point of purchase. We use Facebook more for demand generation and branding. Especially the large brands that the face of advertising is changing. You have people doing these conversations, you have to understand that people can’t just sit on their laurels as a brand anymore, that people are talking about you, irrespective of whether or not you’re in the conversation. So you probably want to be in the conversation. So you’ve got brands that are going out there and, for instance, we do some things called liking campaigns where we’re building out a fan basis for brands, but that’s really just the first step in a more cohesive marketing plan. So you gain fans for your brand page and you’re certainly going to be engaging them through their Facebook walls. But you will also want to use the ads to re-market to them and make sure that you’re getting messages out, and the advertising has had an effect through recall and stuff like that. You know, it’s very effective in the branding space for continuing to stay top of mind and as an actual demand generation vehicle. Search is not a demand generation vehicle. The demand is generated out in the marketplace. And basically you’re seeing an ad for Sears and they’re advertising their appliances. And that’s keeping buying appliance at top of mind. I may be thinking that I need to replace my dishwasher. It’s breaking down. Or it’s about to break down. So the demand generation is done elsewhere. And search has the benefit of being a demand facilitator vehicle. So we liken this more to being on the demand generation side and helping brands tap into the right audiences and make sure that they’re getting their engagement rates up as high as possible.
ROB: What does Facebook charge? You mentioned $5,000. Does that include what you have to pay Facebook?
CHARLES: Yeah, we do. We charge on a CPM basis. So yes, it’s all inclusive.
ROB: When you say you charge on a CPM basis, what do you mean by that?
CHARLES: We sell advertising on flat cost per thousand impressions. That’s a CPM. So I don’t know what our rates are. But right now I think it’s $1.50 or $2.00 CPM. So that’s for every thousand impression we charge a dollar or $2.00.
ROB: And how much of that goes to Facebook?
CHARLES: It depends on the campaign. We take on the risk of that because we understand the advertising environment. And so we know the tricks of the trade. But it’s totally different for every campaign and every target and market. So we’re bidding for each one of the constituent segments in an auction environment. So there’s a lot of auction dynamics at play. So it’s all over the board.
ROB: If I were to try to advertise on Facebook myself directly without an API, would I have to go through the auction process? Is that how the price would be determined?
CHARLES: Yeah exactly. You probably wouldn’t even realize it, but you are.
ROB: Because the search on Google keywords is auctioned off.
CHARLES: It is. Oh yeah. It’s a highly competitive auction. However, it’s kind of a black box auction. Used to be a lot clearer. But they’ve added some factors in that made it a heck of a lot more difficult to understand the real dynamics of the auction marketplace.
ROB: You mean Facebook’s done that or Google?
ROB: Oh it’s gotten much more difficult to know how that’s working?
CHARLES: They’ve gotten a lot better at separating our collective money from our wallets.
ROB: Okay. Now what about YouTube now that it’s owned by Google? Are they an effective place to advertise?
CHARLES: Yeah. We’ve done some YouTube advertising in the past. It’s not something we do regularly but yeah it’s a good market right now. It’s fairly cheap in the comparison of things.
ROB: If someone had a small business that they started in the last year and the gross was $1-5 million dollars, would you suggest that they hire you to advertise on Facebook?
CHARLES: It really depends on the circumstance and the business. You know some businesses are going to be more likely to succeed. Internally we say is it a fun brand. What kind of industry are you in? I can tell you there are some things that are just not particularly going to set your hair on fire in social media. So I’d have to know more on the specifics.
ROB: Among large companies, which ones would gain the most or do gain the most from advertising on Facebook. What are some that would work well?
CHARLES: There’s lots of companies that do very well. I mean large consumer brands do very well. The entertainment brands do very well. You know if you’re a well known brand, you’ll probably do well. There are some in some industries that it’s not particularly interesting. People are attracted to the brands that they know. And it is a very effective channel across a whole variety of industries.
ROB: I guess Apple would be a good example of one that would do well.
CHARLES: Oh they crush it. They would crush it!
ROB: I guess Disney?
CHARLES: Disney would do very well. They do very well actually.
CHARLES: For sure. Coke doesn’t do much advertising per say, but actually their fan base was started by just a Coke loyalist consumer, and eventually they did take it over from him once they had a couple million fans.
ROB: Charles, it’s been great talking to you. Is there anything else that you’d like to say?
CHARLES: I’d encourage everyone to go out there and take a look at Facebook and the changing nature of advertising because it’s really changing dramatically. It’s changed a lot over the last few years, and will continue to. So just understand how it might apply to your business. Certainly, if we can help you, please let us know.
ROB: How would they contact you if somebody wants to talk to you about this?
CHARLES: Sure. You can contact me at email@example.com. And I’ll be happy to answer any questions that someone might have.
ROB: Thank you, Charles.
ROB: After the interview, GM announced that it was ending its advertising on Facebook. I asked Charles for his view of that decision and he pointed to an article by his company’s CEO, Dave Williams, on the AdAge website. Here is a link to the article.