Advertising on Facebook has gotten a bad rap of late, but Group M, the media-buying unit of ad giant WPP, is licensing technology from Buddy Media to make it easier for clients to spend money there, as well as other social networks.
Group M is picking Buddy Media as a preferred platform for all its Facebook buying across media agencies including Mindshare, Maxus, MEC, MediaCom and others. Group M, the world's largest single consolidator of ad dollars in the world, spent $200 million on Facebook ads in 2011 for clients such as Dell, AT&T and Macy's . WPP CEO Sir Martin Sorrell has said that could grow to $400 million in 2012.
While the deal with Buddy Media isn't exclusive, Group M North America CEO Rob Norman said all agency personnel will be trained on Buddy Media technology and where possible spending will be consolidated there. "The goal is to get as much as reasonably possible on one platform," said Rob Norman, Group M CEO of North America, who also serves on Facebook's "client council."
WPP and Buddy Media already have close ties: the holding company invested $5 million as part of a funding round in 2010, and at the time said it would develop custom products for WPP clients.
Buddy Media grew up providing software to companies that helps maintain and scale their presence on Facebook. In February, it acquired an ad-buying tool, Brighter Option, including its staff of 21 to add the ability to buy both premium and marketplace ads on Facebook. Just like agencies sometimes use outside tech platforms for search, Group M will use Buddy Media's "BuyBuddy" for Facebook ads.
On the eve of Facebook's IPO last week, GM announced it was cutting ad spend on Facebook, while maintaining its $30 million investment in its Facebook presence. Buddy Media CEO Michael Lazerow is betting the two -- ads and content -- are deeply intertwined.
"Every ad that you run starts as a post to your Facebook page," he said. "You post to your page and then buy the distribution of that post. They are tied together. Our bet with this is that a publishing system and an advertising system on social has to be together."
Mr. Lazerow believes the Group M deal will make Buddy Media the largest consolidator of Facebook ad spending. Mr. Norman said the goal isn't necessarily to spend more on Facebook--though he believes that will be the case in 2012 -- but to get more out of current spending in terms of insights and data.
"I wanted to make sure that as many dollars as we place on Facebok that we have the greatest application of data possible," Mr. Norman said. "People will spend money on Facebook as Facebook proves out the value and it works."
Even though current investment is relatively small, the general belief at Group M is that Facebook ads have value, and some advertisers, like AT&T, get great results there. Even the biggest advertisers are still testing and learning to determine how meaningful it will be over time.
I think the way Facebook is now completely interwovern into the digital experience and touching everything it means Facebook is a very significant enterprise," Mr. Norman said. "Is it going to be a $50 billion revenue from advertising? I have no idea."