Fogeys Flock to Facebook

Professionals pushing 40 and older are joining the college crowd on the social hub. Can CEO Zuckerberg's team give them reason to stick around?

by Aaron Ricadela

Facebook, the online hangout for college kids and recent graduates, is growing up. The site has amassed an audience of 33 million Web users, initially by catering to well-scrubbed kids who use the social network to nudge their friends, share photos, and swap music tips—all while consuming ads from Gen Y brands like Apple (AAPL), Jeep (DCX), and Red Bull.

Lately, an influx of older users—professionals their 30s and 40s, many in high-tech—is changing the face of Facebook. Among Silicon Valley executives, journalists, and publicists, Facebook has become the place to see and be seen. And it's not just tech. Consulting company Ernst & Young's Facebook network boasts 16,000 members, Citigroup's (C) claims nearly 8,500.

Factor in plans by Microsoft (MSFT), Facebook's biggest business partner, to help turn the site into a tool for making professional connections, and the Palo Alto (Calif.) Internet company could be on the cusp of expanding its already impressive advertising roster, increasing its value as a buyout target or initial public offering candidate, and challenging professional-networking site LinkedIn as the go-to nexus for recruiters and investors.

Changing Traffic Patterns

"People in the Valley definitely search professionally on Facebook first," says Keith Rabois, vice-president of strategy and business development at Slide.com, which makes photo-sharing applications that can be used on other sites, including Facebook. Rabois was an executive at LinkedIn until May.

But older users are behind the recent traffic surge at Facebook, which says it signs up 150,000 new users a day. In June, 11.5 million of the individual visitors to the site were 35 or older, more than double the number a year before, according to market researcher ComScore Media Metrix. The 35-and-up crowd now accounts for more than 41% of all Facebook visitors. Among the fogeys with profiles: Internet pioneer and Google executive Vinton Cerf, venture capitalist Vinod Khosla, and Salesforce.com (CRM) CEO Marc Benioff. Jeff Pulver, a telecom entrepreneur and blogger, famously said in a recent post that he was forsaking LinkedIn for Facebook as his main professional hub (see BusinessWeek.com, 8/6/07, "Confessions of a LinkedIn Dropout").

Even Facebook's competitors acknowledge change is afoot. "Clearly, Facebook has lots of traffic and a lot of that traffic is from the same group of users as on LinkedIn," says David Cowan, a managing partner at Bessemer Venture Partners, a LinkedIn investor (see BusinessWeek.com, 1/29/07, "LinkedIn Reaches Out"). Yet during Facebook's most recent growth spurt—it has added 1.3 million visitors since May, according to ComScore—LinkedIn's audience hasn't declined, Cowan says.

"A Lot More Buzz"

So the question now for Facebook, marketers looking to advertise there, companies that want to own it, and investors who eventually may buy its shares is whether 23-year-old CEO Mark Zuckerberg and his deputies can keep attracting the long-in-the-tooth crowd while preserving the site's spring-break atmosphere of beer-drinking photos and innuendo.

Since its start in 2004, Facebook has attracted a more upscale young audience than News Corp.'s (NWS) MySpace, while avoiding the button-down feel of LinkedIn (see BusinessWeek.com, 7/2/07, "MySpace, Facebook: A Tale of Two Cultures"). "In some ways, LinkedIn feels more like a Chamber of Commerce mixer," says Barry Parr, a media analyst at JupiterResearch. "Facebook clearly has a lot more buzz." More than 48% of Facebook visitors in June came from households with incomes over $75,000, rivaling 55% for LinkedIn, and well above MySpace's 39% figure, according to ComScore.

Advertisers have taken notice. Coca-Cola (KO) has been running promotions on MySpace the past two years for brands including Cherry Coke and Fanta, and has promoted Diet Coke and other drinks on Google's (GOOG) YouTube. The company has yet to advertise with more than simple banners on Facebook but is weighing its first large-scale promotion there. "We see a lot of opportunity there," says Coke spokeswoman Susan Stribling. Procter & Gamble (PG) has advertised Crest toothpaste, Secret deodorant, and Noxema skin-care products on Facebook, and more campaigns are coming in the fall, a spokeswoman says without elaborating.

Most of Facebook's revenue comes from banner ads placed by Microsoft as part of a 2006 deal between the companies. Facebook also directly sells more interactive campaigns, including sponsored profiles and "stories" that appear in users' constantly updated news feed on the site, advertising such things as Hewlett-Packard (HPQ) computers and PNC Bank (PNC) financial services. As the site lures more professionals, it could attract more brand advertisers that want to aim word-of-mouth campaigns at an upscale audience, says Parr. "Facebook is obviously a wonderful environment to reach people in a way that's personal, but not too invasive," he says.