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Facebook Sees Fourfold Jump in Advertisers Since 2009

Facebook Inc., owner of the world’s largest social-networking site, said its advertisers have more than quadrupled since the start of 2009 as marketers aim to get their products before a growing global audience.

Facebook, which has been opening offices around the world to serve ad clients, doubled the number of salespeople last year from 2008, according to an e-mailed statement. The company didn’t disclose the number of advertisers or salespeople.

Companies are boosting ad spending after a lull during the recession in a bid to reach consumers who spend long stretches on the Internet. Facebook, which has more than 500 million users, counts Procter & Gamble Co., Toys “R” Us Inc. and Virgin America Inc. among its customers. It’s relying on ads to maintain sales growth and lay the groundwork for a possible initial public offering.

“We’re very well positioned as people come out of this current economic situation,” Mike Murphy, vice president of global sales, said in an interview at Facebook’s headquarters in Palo Alto, California. “What we’ve become is absolutely core to marketing campaigns.”

Facebook sells ads that are placed on the home pages of users, where the latest comments, pictures and links from their friends are posted. The ads also show up next to profile pages, which may include a person’s information such as gender or birth date.

Adidas Marketing

Adidas AG has used Facebook to promote its youth-focused Originals label, said Chris Barbour, who leads global digital marketing for the company’s Sport Style unit. Adidas, the world’s second-largest sporting-goods maker, tries to target users regionally to give the brand a personal touch, he said.

“Wherever our fans are, we’re going to use Facebook to speak to them,” Barbour said. “And we’re going to try to speak to them in a locally relevant way.”

The company ran ads this year to drive more users to its Originals page on Facebook, which features new products and user discussions, he said. Three times as many people signed up to be “fans” of the page during the campaign, compared with the typical rate, he said.

Facebook ran 176 billion display ads in the U.S. in the first quarter, up from 70.7 billion a year earlier, according to research firm ComScore Inc. in Reston, Virginia.

Yahoo, Microsoft

Its growth comes as a threat to rivals Yahoo! Inc. and Microsoft Corp. Facebook has emerged as the largest site for display ads, with a market share of 16 percent, rising from 11 percent in the fourth quarter. That topped Yahoo, which had a 12 percent share, down from 13 percent in the previous period. ComScore doesn’t include the ads that Yahoo places on websites it doesn’t own. Microsoft had 5.5 percent.

Facebook also became the most visited website in March, overtaking longtime leader Google Inc. for the first time, according to Experian Hitwise, a research firm in New York.

Even as companies ramp up spending, privacy challenges threaten to curb advertiser interest if it leads to a slowdown in Facebook’s user growth, said Debra Aho Williamson, an analyst at market-research firm EMarketer Inc. in Seattle.

Facebook faced growing criticism over how it handles privacy after announcing features in April that enabled more sharing with outside sites. Consumer groups filed a complaint with the Federal Trade Commission, and some users dropped the service.

Responding to the criticism, Facebook introduced new privacy settings last week that make it easier for users to protect their information. The company is also making less data publicly available.

‘Pay Attention’

The new settings should “help us scale the service to millions and millions of more people,” Chief Executive Officer Mark Zuckerberg, 26, said last week. The privacy complaints had no meaningful impact on Facebook usage, he said.

Companies should keep a close eye on user growth numbers in coming months, EMarketer’s Williamson said. Users might decide to hide some personal information used by advertisers to target customers, she said.

Facebook had 519.1 million users in April, up from 411 million in September, according to ComScore.

For now, the user growth presents a big enticement for advertisers, Williamson said.

“Any large numbers like that make advertisers say, ‘Wow, I need to pay attention to this.’”

To contact the reporter on this story: Brian Womack in San Francisco at Bwomack1@bloomberg.net

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