Skip to main content

Facebook Ad Platform Announced - why I'm skeptical

Facebook made their formal announcement today of how their new ad platform will work. Founder Mark Zuckerberg made an enthusiastic presentation at ad:tech in New York, outlining several new sets of functionality.

Facebook Ads --

This is the primary advertising vehicle. As described in the press release:

Today, Facebook Ads launched with 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.

Advertisers can design custom pages with information, content, and custom applications--"any application that was written for users on the Facebook Platform," Zuckerberg explained. Facebook users can sign up as "fans" of that brand, install branded applications (games, etc.), that will all show up in their profiles' "mini feeds" and on the "news feeds" that are broadcast to their friends lists. Once an advertiser has built a page, Facebook users can become a fan of a business and can share information about that business with their friends and act as a trusted referral. This is the viral and social aspect that Zuckerberg touted as one of the marketing breakthroughs of the new system.

Another quote from the press release that further emphasizes the social and viral aspect:

Facebook’s ad system serves Social Ads that combine social actions from your friends – such as a purchase of a product or review of a restaurant – with an advertiser’s message. This enables advertisers to deliver more tailored and relevant ads to Facebook users that now include information from their friends so they can make more informed decisions.

The third component is called Insights. This analytics functionality gives marketers metrics about their presence and promotion on Facebook, provides access to data on activity, fan demographics, ad performance and trends that better equip marketers to improve custom content on Facebook and adjust ad targeting. It is expected that this is where Facebook will let marketers see all the ways they can slice and dice user demographics, interests and activities.

Beacons --

Beacons allow users to share their actions on 44 participating sites with their friends on Facebook. The websites participating in Beacon can determine the most relevant and appropriate set of actions from their sites that users can distribute on Facebook. These actions can include posting an item for sale on eBay, completing a purchase, viewing of video, buying movie tickets on Fandango or buying airline tickets on Travelocity. When users who are logged into Facebook visit a participating site, they receive a prompt asking whether to they want to share those activities with their friends on Facebook. If they do, those friends can now view those actions through News Feeds or Mini-Feed stories. These actions were touted as brand endorsements by Zuckerberg.

Partners --

Facebook also announced that 60 companies have immediately committed to using Facebook Ads. Partners joining Zuckerberg on the stage today included senior executives from Blockbuster, CBS, Chase, The Coca-Cola Company, Sony Pictures and Verizon.

What was not announced --

There was speculation in the blogosphere that Facebook would announce the creation of an ad network. No reference was made to anything that ambitious. For now, it seems clear that the Facebook site itself will be the focus of the initiatives announced today.

Time for the Facebook backlash?

Call me grumpy, but from my point of view the company has identified some great ways to annoy users with a constant barrage of ads and, in the process of so doing, create plenty of reasons for privacy advocates to begin targeting the site.

Zuckerberg is convinced that advertising messages can be spread virally. I am sure that some can, if they are humorous enough or otherwise entertaining. To me, though, it just seems like this is just a good line to attract advertisers to the site. After all, how often have you ever wanted to share an ad with your friends or been moved to endorse a brand in a communication to a friend?

The improvement in precise ad targeting based on the use of Facebook user data should initially increase click-through rates. I suspect advertisers will flock to Facebook to try to take advantage of it. Still, I would not be surprised to see Facebook users eventually begin to ignore these ads as energetically as they currently ignore ads on the site. When users begin to see the increase in number and types of ad material being presented it will reduce the overall impact of the ads.

As for the privacy issues, it appears that Facebook is lagging the financial industry, for example, in protecting users privacy. It has been discussed on ValleyWag and other blogs that Facebook developers have access to production data, ie, the personal profiles of all those users. The company is supposedly scrambling now to tighten its controls. Today's announcement indicates that all that data will now be presented to advertisers, supposedly scrubbed of personally identifiable information (PII), in an aggregated manner. Still, I find it hard to believe that every user will be comfortable allowing all their information to be shared with advertisers. This is an issue the Google OpenSocial initiative, and the various partners involved in it, will have to face, as well.

Sources: Press releases for Facebook Ads and Facebook Beacons

Comments

Popular posts from this blog

Brazil - in a bubble or on a roll?

A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation

Thursday Bounce: Trend Busters, Swing Signals and Trend Leaders for July 9, 2009

This is a quick post to announce that we have published Thursday's Trend Leaders, Swing Signals and Trend Busters at Alert HQ . All are based on daily data. Today we have the following: 72 Swing Signals -- A couple of days ago we had 35 signals, today we have twice as many. Happily, we now have 65 BUY signals, a mere 4 SELL Signals plus 3 Strong BUYs. Whoo-hoo! 56 Trend Leaders , all in strong up-trends according to Aroon, MACD and DMI. There are 18 new stocks that made today's list and 60 that fell off Tuesday's list. 48 Trend Busters of which 5 are BUY signals and 43 are SELL signals The view from Alert HQ -- Talk about mixed signals. If you look at our Swing Signals list you would think the market was in the middle of a big bounce. BUY signals are swamping the SELL signals and we even have a few Strong BUYs. Yes, there's a good sprinkling of tech stocks and tech ETFs but the distribution is pretty broad-based with a good number of different sectors represented, eve

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position. This first post in the series starts at the beginning: getting good investment ideas. Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets. As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professional