How a corner of Dublin is spearheading the new social age of online advertising

5 Nov 2009

Under the bonnet at Facebook – a driving force in the 21st-century social-media business.

It’s evening time and I’m standing on the edge of Hanover Quay musing about the pummelling that traditional media industries have received in the past year. TV, print and radio advertising have plummeted and these industries are rushing to reinvent themselves at a time when fewer people watch TV and even fewer people under 30 are buying newspapers.

At the offices

Behind me are the shiny new offices of social-networking phenomenon Facebook, which only a year ago had less than 100 million users and today counts 350 million users worldwide – including a quarter of the Irish population. A few hundred metres in front of me on the other side of the canal estuary are the colourful offices of search giant Google.

Both companies are emerging as the two major power brokers in the online advertising world and it’s curious how a tiny area of Dublin is home to their international ad sales operations.

In recent weeks, Google reported a 7pc increase in third-quarter revenues of $5.94 billion, prompting a confident CEO, Eric Schmidt, to say the worst of the recession is behind the company. Meanwhile, Facebook, which was spawned in a Harvard dorm in 2004 by Mark Zuckerberg, Dustin Moskovitz and Chris Hughes, is estimated to have made revenues of $300 million last year. In September, it declared itself cash-flow positive for the first time.

It started with girls

Zuckerberg created Facebook as a way of comparing girls on Harvard’s campus after he hacked the university’s servers. The first iteration of the social-networking phenomenon, ‘Facemash’, got inadvertently leaked across campus and soon Zuckerberg faced expulsion and charges of violating copyright and privacy laws.

Luckily, the charges were dropped and today Facebook is a social hub for millions of people to micro-blog, email, share pictures and videos and play games. The social glue of Facebook has resulted in it becoming a major draw for advertisers, media brands, charities and micro-businesses to reach an audience in the context of trust. In recent months, Facebook acquired FriendFeed and will soon appear in living-rooms via the Microsoft Xbox.

Late last year, it emerged that Facebook was hunting for an office in Dublin and it also transpired that it would be hiring 70 workers to drive its EMEA operations. Last week, at the opening of its new base on Hanover Quay, Facebook announced plans to hire a further 70 people across several functions, including user and online operations, advertising sales, advertising campaign delivery, legal, finance and engineering.

Eight billion minutes

Heading up the EMEA division is the director of online operations, Colm Long, who revealed that, globally, eight billion minutes are spent on Facebook every day and two billion pieces of content are shared on the site every week. “We now have tens of thousands of advertisers using our ads system and that has tripled in recent months.”

Facebook’s location in Dublin is no accident. Chief operations officer Sheryl Sandberg, in a previous role with Google, had such a positive experience with the city that when the opportunity came to open an international office, there was nowhere else she would consider.

Long explained: “Ireland has proven invaluable to Facebook and as a result we’ll be ending this year with double the workforce we thought we’d have. Top of mind for us is access to talent. Not just the indigenous talent that comes from a high-quality education system, but also the fact that, despite all the doom and gloom, people from overseas are willing to locate here. There’s no hard sell.

“It’s also about the ease of doing business here. Ireland is extremely well networked with a great small-business community.”

Accessing talent

IDA Ireland’s chief executive, Barry O’Leary, said access to talent exceeds corporation tax as a reason for companies, such as Google, Facebook and Microsoft, to expand here, but warned it is vital we increase the availability of technology in the Irish education system.

“As a general rule, the companies coming in find enough of the talent they need because there’s not only local talent, but also free movement of labour. But we need to continuously push science and technology in our schools. Facebook is demonstrating the careers of the future that are possible.”

The chief financial officer of Facebook, David Ebersman, explained that 70pc of Facebook’s users come from outside the US. “Given the global impact, it is critically important that we collaborate with users, advertisers and developers in a way that respects their unique needs in terms of language, culture and time zone. Ireland is the centrepiece of that strategy.

“Facebook is at a point where our business is doing very well. This has been noticed by advertisers who are reaching out to the audience. Is this a fad? It’s our job to make sure that’s not the case and continue to provide services and products that are of interest to users. This means coming up with new ideas to keep users active.”

Three things

Colm Long explained that user engagement, technology development and traditional business values are keeping the company at the business end of the advancement of social advertising.

“When you compare the Facebook of 2004 with what it has become today, it’s almost embarrassing looking back. It has moved from banner advertising to a combination of home page ads and ad space units. It is more flexible and adjusted to people’s budgets.

“Over the past 12–18 months, we’ve focused on leveraging the engagement opportunity that exists on Facebook – an ad you can share with friends, that you can comment on and vote in a poll about – all of which are really valuable for advertisers. We have a phenomenon now where people have begun sharing ads as content as much as they would share a newspaper article – for an advertiser that’s really new and again there’s nowhere else on the internet you can do that.

“Advertising in 2010 will move away from the model of clicking on an ad to click through to a website just to buy a product. It’s going to be much more about using the experience to establish a conversation or get feedback to drive new product development. There are lots of different formats we are looking at.”

Underlining the importance of the new operation on Hanover Quay, Long concluded: “Seventy per cent of the existing user base of Facebook is outside the US and I’m proud to say that many of the future products and features you’ll see on the site will come from what the Irish team will learn from users and advertisers in the UK or Germany, for example. That’s a big win for us because it wasn’t on the roadmap this time last year.”

By John Kennedy

Photo: Colm Long, head of Facebook’s EMEA division; Tánaiste and Minister for Enterprise, Trade and Employment Mary Coughlan TD; and David Ebersman, Facebook’s chief financial officer. – Digital 21 is a campaign to highlight the imperative of creating an action programme to secure the digital infrastructure and services upon which the success of the economy depends.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years