On Facebook’s open to advertisers

Information Week

On Tuesday, Facebook announced Facebook Ads, an ad system for businesses to present Facebook users with targeted ads in a social context that encourages customers to share marketing messages with friends.

According to the company’s statement, Facebook Ads is

“an ad system for businesses to connect with users and target advertising to the exact audiences they want. And “through Facebook Ads, these users can now learn about new businesses, brands and products through the trusted referrals of their friends.”

“Facebook Ads represent a completely new way of advertising online,” Zuckerberg, Facebook’s CEO, told an audience of more than 250 marketing and advertising executives in New York. “For the last hundred years media has been pushed out to people, but now marketers are going to be a part of the conversation. And they’re going to do this by using the social graph in the same way our users do.”

Facebook Ads consists of three parts: a way for businesses to build pages on Facebook to connect with their audiences; an ad system that facilitates the spread of brand messages virally through Facebook Social Ads™; and an interface to gather insights into people’s activity on Facebook that marketers care about.

Just like a Facebook user, businesses can start with a blank canvas and add all the information and content they want, including photos, videos, music and Facebook Platform applications. Outside developers have created a range of applications to enhance Facebook Pages, such as booking reservations or providing reviews of restaurant pages, buying tickets on a movie page or creating a custom t-shirt. Companies launching applications for Pages include Fandango, iLike, Musictoday LLC, OpenTable, SeamlessWeb, Zagat Survey LLC and Zazzle.

Twelve major advertisers plan to use the system initially, including Blockbuster, CBS, Chase, The Coca-Cola Co., Saturn, Sony Pictures, The New York Times Co., andVerizon.

“With Facebook Ads, our brands can become a part of the way users communicate and interact on Facebook,” said Carol Kruse, VP of global interactive marketing at Coca-Cola, in a statement. Coca-Cola plans to invite Facebook users to add an application to their Facebook pages called “Sprite Sips,” which will let them modify and interact with an animated Sprite Sips character. U.S. consumers will be able to access additional features of the advertising application by entering a PIN code found under the caps of 20-ounce Sprite bottles.

In addition, Facebook also announced today that 44 websites are using Facebook Beacon, a tool that allows users to share information
from other websites for distribution to their friends on Facebook. Beacon is a part of the Facebook Ads system.Web sites participating in Beacon can allow users to sell an item, buy an item or view video. When users who are logged into Facebook visit a site in the Ads network, they receive a prompt asking whether to they want to share those activities with their friends on Facebook. Friends may view those actions through the Facebook News Feed or Mini-Feed stories.

Online auctioneer eBay, for example, plans next year to use Beacon to let sellers include their eBay listings in their Facebook News Feeds. This will allow them to share information about the items they are selling with their network of friends.

On Nov. 7, Blockbuster launched MovieClique, an application that allows Facebook users to create lists of movies they want to see, or movies they’ve already seen, along with ratings and reviews, to share with their friends.

With Beacon, Web sites offer Facebook users the most relevant parts of their sites for distribution on the social site. When a logged in Facebook user visits a participating site, he or she is asked whether they want to share activities with friends.

eWeek

Fandango and Zagat have created applications to buy tickets on a movie page and book reservations, respectively, while Blockbuster is letting fans compose lists and reviews of films.

IDC analyst Rachel Happe said Facebook Ads has the ability to do for brand advertising what Google’s AdWords keywords platform did for
direct marketing: making ads available to small and midsize businesses. This strategy helped Google, of Mountain View, Calif., grow to its
roughly $200 billion valuation.

But Facebook users could also decide that they really have no interest in associating themselves with products or companies. Moreover, the process is not without its drawbacks. Happe said she tried setting up a Facebook Page but can’t invite people to it without buying an ad.

“The only way around it was to first make myself a fan and then get people in my network to go to my profile and sign up for the Page from there … so it’s not really smooth yet but they are obviously trying to influence companies to use their advertising,” Happe told eWEEK Nov.
7.

Still, Facebook Ads delivers us a new model. While many businesses buy their way into online advertising through spending, Facebook users may influence the reputations of the businesses by their ability to share information about them to friends.

“Advertising comes from people, who imbue a company with value by loyalty,” Forrester Research analyst Charlene Li told eWEEK Nov. 7. This means advertisers will want to redouble their efforts and have the most interesting advertisements so they can attract the most influential people with friends to endorse their brands. When Facebook makes it a two-way street those lists and review content will strengthen its partnerships and spread its brand even more, she said.

Of course, by creating a socially driven ad platform, Facebook is inviting, (or re-inviting if you prefer), another elephant into the room: privacy concern. While the Federal Trade Commission on Nov. 1 bemoaned the fact that advertisers cull too much data from people’s Web actions, Facebook promised to only use information that members share, and won’t give it to advertisers.

Forrester’s Li, who has one business and one personal Facebook account, said the privacy concerns over social networking sites are overblown because of the very nature of the site: people intend to get found by other people on such sites.

In addition, Facebook wouldn’t bite the people that feed the machine by giving out their information. Would it?

Facebook Ads may alienate some users, who will have to decide if the site is still the right place for them. But most of the fans seem fiercely loyal, so they are likely to take the new features in stride.

If the ad system doesn’t drive more folks to The Coca-Cola Company and other advertisers, they may well pull out. That would just put Facebook back to square one, which, at a $15 billion valuation and Microsoft as a prime supporter, is not such a bad place right now.

Just remember that no one expected Google to do as well as it has with its ad programs. If Facebook Ads takes off, the sky is the limit.

AdAge

Sharing in the brand engagement

Tactically, it’s not an easy concept to explain. The first part involves user-initiated recommendations of a brand: When people visit a business’ Facebook page, they can choose to share their engagement with the brand (by becoming a “fan” or writing on the brand’s “wall”) with their peer network using a newsfeed or mini-feed. Facebook users can also share their interaction on a brand’s own website through a program coined Beacon. For example, users can share with their network when they post an item for sale on eBay, rent a movie on Blockbuster.com or rate a book on Amazon.com.

The idea is that communication moves not from the brand to the consumer but from the consumer to his or her friends and family.

Then there’s the actual paid-advertising part: Facebook will permit advertisers to attach an ad message to those user notifications. To do so, marketers make a Facebook ad buy targeting users by any number of traits users volunteer on their profiles, such as age, political leanings or interests and activities. Facebook will then serve up those ads — fairly simple text-plus-graphic creative — either without the social element or, if a friend has sent notification of a brand engagement, within that.

“We are putting advertising back in the hands of people,” said Chamath Palihapitiya, VP-product marketing and operations, Facebook. He said it would create a system for user recommendations “so ads are less like ads and more like information and content.”

Facebook is offering the Beacon placement and branded pages for free. In return, the social-networking site gains access to potentially valuable targeting data about what kinds of brands users interact with.

A Trojan Horse

“It’s a brilliant Trojan Horse,” said Mark Kingdon, CEO of Organic. Overall, he called the platform “a natural evolution, both advertiser-friendly and user-friendly.”

Marketer reaction ranged from modest skepticism to major enthusiasm.

Jeffrey Glueck, chief marketing officer at Travelocity, which was a launch partner of Facebook’s Social Ads platform, said he was excited about the opportunities, but he admitted his brand has an inherent social aspect to it.

“Travel is very social, people like to talk about travel, invite their friends … and Facebook users like to share information with friends,” he said.

James Warner, exec VP-Avenue A/Razorfish East Region, said he liked the ability to linking a user action into an ad. “It’s unique,” he said, reservedly.

John Harrobin, senior VP-marketing and digital media at Verizon, was perhaps the most effusive, calling it exciting in the same way Google’s launch of AdWords was exciting. The difference, he said, is Facebook’s plan not only drives ads to those people who are in the bottom of the sales funnel but also the overall marketing effort.

“This lets us tap into the Facebook community’s potential to drive results,” he said.

But will consumers share?

Still, the service hinges on several things, not the least of which is users wanting to share their purchase behavior with friends. The targeting aspect assumes people honestly share their profile info. It also doesn’t take into account what is happening in the offline world.

Rob Norman, CEO of Group M Interaction, blogged about the announcement and said it was encouraging concept but also posed a “massive challenge in reputation management and just one more destination to deal with in terms of driving the traffic with messaging that shapes opinion.” He cautioned that clutter could become impenetrable, that people who share information about brands with friends might not actually like that being co-opted by advertisers; an easy slip up could, of course, broadcast something like a porn purchase to an entire social network.

While Facebook executives said that the ads would feel more like content because they would be yoked to a friend’s comments, some analysts said the approach could backfire.

“Just because you like Reebok doesn’t mean I am going to like Reebok,” said Jeremiah Owyang, a senior analyst at Forrester Research.

Facebook has 60 advertisers already signed up as partners, and last night 100,000 new profiles were added to the site to promote products, bands and other interests. Condé Nast will ask visitors to its Flip.com and Epicurious.com sites if they would like to send information back to Facebook, and will later expand the option to its other sites.

Adage

One day after Facebook unveiled a number of ad innovations, media outlets are setting up shop on the site. CBS plans to promote the recent return of longstanding reality program “The Amazing Race.” CondeNet’s Epicurious.com has a site offering a recipe for “beef stroganov” from the pages of Gourmet magazine as well as wallpaper downloads featuring cranberries or “salmon roe.” The New York Times Co. has also created a Facebook page that allows users access to features such as top news, most e-mailed articles, video and The New York Times
News Quiz. The newspaper company has also set up pages for The Boston Globe’s Boston.com and its regional media group.

Coke has spot too

And at least one marketer was ready to jump in as soon as it was able. A new page featuring Coca-Cola went live at 4:21 a.m. today, according to a news feed at Coke’s new Facebook roost.

Facebook is in many ways going down a path used by MySpace, opening its collection of user-generated profile pages to marketers, who can now populate the social net with “personifications” of individual products and services. Facebook also unveiled a system that lets marketers spread promotional messages virally and what it called an “interface” that lets advertisers analyze relevant activity by Facebook users.

For its part, CBS is using the site to develop an online community of “Amazing Race” fans. The show’s page will include interactive content tied to the program, which had its season premiere Sunday — filling the slot that was to be occupied by “Viva Laughlin,” a hybrid musical comedy program that was widely drubbed by critics.

“Word-of-mouth has always been very important in entertainment marketing, but now because digital media has fractionalized the audience so much, we see this Facebook [move] as kind of tying it back together,” said George Schweitzer, president of CBS Marketing Group. He likened Facebook as a replacement for the office water cooler, where people often discuss what happened the previous night on their favorite programs. CBS may even use its “Amazing Race” site to seek out people who are predisposed to the show’s premise because they enjoy travel, hiking or are from the same hometown as a contestant, Mr. Schweitzer said.

Broader range of ads

Facebook’s move seems to be aimed at opening its users to a broader range of ads and promotional techniques. But it’s not as if the site hasn’t let marketers in before. In August 2006, for example, the company struck a partnership with J.P. Morgan Chase’s Chase credit-card division to be the site’s exclusive credit-card sponsor. Chase created a social network within Facebook of people interested in learning about or signing up for credit-card services.

Now, however, the site is open for many different kinds of ad placements. A new program called Facebook Beacon provides a way for users to choose to share their activities with their friends on the social network. People who surf Blockbuster.com, for example, might send the titles of the movies they add to their queue on Blockbuster’s website back to their friends on the Facebook website. In another example, Coca-Cola will let participating users create, configure and interact with an animated “Sprite Sips” character aligned with its Sprite soda.

Marketing observers have some concerns that Facebook users could be a little rattled when they find their activities on some applications, such as Facebook Beacon, communicated to a broad array of friends. But Sarah Chubb, president of CondeNet, the Condé Nast internet unit, said people are generally interested in talking about hobbies and passions, and so long as advertisers appeal to that dimension of consumer behavior, the ads and promotions could be more welcome.

That said, there has to be some sense of when to approach and when to hold back, she suggested. “I think Facebook is being very careful to limit the number of things you’ll see in any given day, a pretty conservative limit. We are being pretty conservative about the kinds of messaging that we’re doing. It’s not going to look like an ad. It’s going to look like an invitation to try it yourself.”

Internet Evolution

Three Flaws With Facebook’s Social Ads

  1. Where’s my money? Since the Paleolithic era, celebrities and regular cats alike have been endorsing products and getting compensated for it through money and lifetime supplies of triple-quilted paper towels. Fast-forward to Web 2.0: Everything gets interactive, everyone is a celebrity, and we find the best endorsements come from our friends. Facebook’s plan to mooch off our endorsements is all well and good — for Facebook — but where are my paper towels? Why should I scratch your back if you’re throwing itching powder on mine? As we get turned into marketing monkeys, we should get compensated somehow. And
    if there is little demand for this from our side, well, then we’re just falling into a trap of stupidity.
  2. If it’s optional, why should I? This system’s success relies on user compliance. For those of us who are neurotic and insecure (I am not referring to myself, per se… I have this friend, see?), a product endorsement with our picture on it could mean subjection to judgment by our peers. “Umm… Did you see that Nicole bought the ‘Shari Lewis Memoirs’ on Amazon.com? What an incredible weirdo!” If I’m not making any cash money off of the deal, and I’m risking becoming socially shunned by the anti-Shari Lewis congregation, why would I comply?
  3. I don’t have to take this! I can go somewhere else!
    As Facebook becomes a storefront for marketing activity, will it lose its appeal and, in turn, its network of users? Maybe not. Facebook has promised (Scout’s honor) that this new system will not produce any more ads than usual. And all successful social networking sites will, at some point, have to sell advertisements or succumb to homelessness. So, the spiteful shift to a new network may be pointless.

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4 Responses to On Facebook’s open to advertisers

  1. […] fred wrote an interesting post today onHere’s a quick excerptOn Tuesday, Facebook announced Facebook Ads, an ad system for businesses to present Facebook users with targeted ads in a social context that encourages customers to share marketing messages with friends. … […]

  2. […] Credit Card Services authored an informative article on credit cards todayHere’s a brief passageIn August 2006, for example, the company struck a partnership with JP Morgan Chase’s Chase credit-card division to be the site’s exclusive credit-card sponsor. Chase created a social network within Facebook of people interested in … […]

  3. […] longscorner wrote an interesting post today on On Facebookâs open to advertisersHere’s a quick excerptFacebook users can also share their interaction on a brand’s own website through a program coined Beacon. For example, users can share with their network when they post an item for sale on eBay, rent a movie on Blockbuster.com or rate a … […]

  4. […] longscorner added an interesting post today on On Facebookâs open to advertisers.Here’s a small reading:In August 2006, for example, the company struck a partnership with JP Morgan Chase’s Chase credit-card division to be the site’s exclusive credit-card sponsor. Chase created a social network within Facebook of people interested in … […]

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