Dennis Yu, the CEO of BlitzLocal, was a guest yesterday on TechCrunch, and he shared his thoughts and knowledge about Facebook spamming and advertising.
BlitzLocal is an advertising agency that – by Yu’s own admission – used to be “in the business of spam”. Although they have stopped spamming, they use the knowledge acquired through it and previously built platform to do legal Facebook advertising.
Yu talks about the beginnings of Facebook and how Zuckerberg ran casino ads on it before he managed to get venture capital. He goes on to say that he made a sizable fortune with ads (posing as messages from Facebook) that used user’s personal information to raise the click-through rate.
Another aspect of the social network that has been exploited is the fact that mid-2007 Facebook launched its platform, providing thus a means for developers to build applications that would interact with Facebook’s features. All the games and quizzes are meant for one thing – collect user data. You must agree it is more likely they will part with it if you give them fun as an incentive.
The data was then for extremely targeted and deceptive ads, and the profits soared because this ads are designed to look like they are from Facebook (same colours, same font):
At the beginning, these developers used Google AdSense, but pretty soon ad networks like BlitzLocal were raising the click-through rate from 0.1% to 4%. With the price-per-click being the same, you can see that the final amount is 60 times higher.
Doing this for a long time, Yu came to the conclusion that the money rests in the things you can make the users do: download a toolbar or surrender their email address and phone number. And game developers favored the ad networks who could bring them the largest amount of money, which led to different legal, semi-legal and frowned-upon practices.
All in all, as with any new platform that opens up, spammers were the first to use Facebook. But Yu predicts that – with time – the deceptive ads will become history, as trusted ads elbow them out for one simple reason: big brand (legitimate) advertisers will raise the price of traffic up to a level that spammers will not be able to reach anymore.