Has Facebook Reached a Tipping Point?
The rumor mill can now relax knowing that Facebook has finally purchased Microsoft's ad-serving business, Atlas. Although the terms of the deal were not disclosed, I viewed the possibility of this deal as a positive development for both Facebook and Microsoft since it gives Facebook the opportunity to bolster its ad analytic suite and lets Microsoft shed noncore assets. For Facebook, the ultimate goal with Atlas is to give marketers the confidence that Facebook is an incredibly effective advertising platform. Is Facebook about to reach a tipping point where advertisers begin to take it more seriously?
From seedlings to forest
Relatively speaking, Facebook and social media as a whole are still within the "nascent advertising platform" category among marketers. As a result, social media advertising has proved challenging because traditional advertising metrics like clicks are a seemingly worthless measurement of effectiveness. During its most recent conference call, CEO Mark Zuckerberg reiterated that earning the trust of marketers is a top priority for Facebook in 2013. Since traditional methods do not give Facebook's platform the credit it apparently deserves, the company has launched an initiative to build out new measuring methodologies that prove the platform's worth. Not only does Altas give Facebook a much-needed advertising backend, it brings the necessary experience for developing new campaign management and measurement technologies.
Facebook argues that today's marketing environment is more challenging than it was a few years ago because there are more advertising channels and no cross-channel platform. Today, marketers tend to adopt "siloed" campaigns for specific advertising channels, which have a high potential of creating an inconsistent end-user experience. With the help of Atlas, Facebook has positioned itself to alleviate this challenge by creating an advertising platform that offers a holistic view of an advertiser's entire campaign. The hope is that this unified approach would help ensure a consistent message is delivered, regardless of platform.
The ultimate dream
Facebook has committed to investing more resources into the Atlas platform to improve its scalability and measurement tools for both mobile and desktop applications. Naturally, the ultimate goal is to make Atlas among the best advertising suites in the business, which it hopes will be enough to drive advertisers onto its platform. Combining Atlas and Facebook's recent partnership with data companies, it appears Facebook may be closer to a tipping point in the online advertising industry than investors appreciate.
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Fool contributor Steve Heller has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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