Have you seen the Facebook movie or read the book it was based on?
Both cover the launch of the social network from the dorms of Harvard to a party at Facebook's Palo Alto offices celebrating the social network's one-millionth member. Remarkably, all of this transpired between October of 2003 and September of 2005.
In both versions, intellectual property theft is asserted, along with deplorable business behavior, but it is difficult to identify if any law was broken. However, if you look hard enough and read between the lines, you can indict media buyers for being completely clueless.
In the movie, the crime scene is an office that looks oddly like the offices where I used to buy media in the early '90s: Young & Rubicam's New York offices on 285 Madison Avenue. The scene depicts a media sales call that occurred sometime in the summer of 2004. Facebook founder Eduardo Saverin had brought Mark Zuckerberg to the meeting much in the way any sales rep might bring his CEO to help close a deal. As Eduardo is presenting the dramatic increase in site membership (I believe he quoted 154,000) to an unresponsive buyer, the scene comically shifts attention to the sophomoric noise made by the famed student CEO out of pure frustration at another dismissive reaction to investing advertising dollars in Facebook.
While the audience in the theater laughed at the immaturity of Zuckerberg, my gut wrenched just a little. As a former media buyer, it was embarrassing to see how clueless buyers can be at recognizing opportunities sitting right in front of them.
Can you imagine the media buy that could have been negotiated with Facebook if just one buyer was paying attention in 2004, and recognized the site's exceptional "membership" growth rate (very different than unique visitor growth), along with the absurd number of visits per month the site was generating while lighting up college campuses?
At that time, the social network was operating on a budget of $18,000. What do you think they would have agreed to do for an advertiser who waved a million dollars at them? A fixed placement on every current and newly created Facebook page? Category exclusivity? God knows what else -- along with the option to renew this annual deal at these terms regardless of future growth. I am sure a handful of $10,000 "test campaigns" were run back then, but recommending a million-dollar investment in Facebook at that time never had a chance of happening -- and that's the real crime.
The habitual issue is that media buyers are trained to say no. They are so risk-averse and more concerned with covering their ass, rather than uncovering opportunities at a stage early enough to stick their necks out on a significant marketing investment that could yield astronomical returns. Instead, media buyers sell their media plans based on an effective CPM (and subsequent calculations) they promise to deliver. The main reason that they funnel millions of dollars into ad networks is to cover these promises. The CPM for a million-dollar buy in Facebook in 2004 would have blown up the spreadsheets buyers had their heads under when this opportunity passed them by.
Nine months after Eduardo Saverin sailed through the New York City media-buying market trying to sell advertising to keep the young company afloat, Facebook gave away 30% of its equity to a venture capital firm in return for $500,000 -- and the rest is history.
This story makes me wonder: What's stopping media departments from thinking like venture capitalists? Media buyers clearly have the expertise to identify media opportunities in early stages that merit unique attention, don't they? Maybe they wouldn't negotiate an equity position on behalf of their clients in these media companies, but they can secure very favorable long-term ad programs if they thought more like VCs and less like, well, media buyers.
When you spend all of your time looking for reasons to say no, you lose sight of what yes looks like.