Facebook Ads: Slam Dunk or Daring Dud?

By Clint Boulton  |  Posted 2007-11-08

Facebook Ads: Slam Dunk or Daring Dud?

Facebook Ads will either be as richly successful as Google AdWords or die on the vine.

It all depends on how users react, analysts from IDC and Forrester Research said, after Facebook launched its ad strategy Nov. 6 to help businesses match advertising to Facebook users and their social network friends.

Businesses who want to shill for their products on the social networking site can set up a Facebook Page similar to consumer pages. 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.

When Facebook users conduct some transaction or post a review they can opt to share that activity with their Facebook friends, who will receive a news alert about that action with Social Ads. These ads can appear either within a users News Feed as sponsored content or in the ad space along the left side of the site.

How will this approach, which is no doubt being keenly watched by Facebook rivals, such as Google and Yahoo, fare?

To read more about Facebook launching its Ads system, click here.

IDC analyst Rachel Happe said Facebook Ads has the ability to do for brand advertising what Googles 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 cant 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 its 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.

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Facebook Ads

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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.

One thing that hasnt changed that sticks in the craw of some industry watchers is the ability to get data out of Facebook, an issue that Facebook CEO Mark Zuckerberg addressed at the Web 2.0 Summit Oct. 17.

Take Blockbusters MovieClique, an application that allows Facebook users to create movie lists and reviews to share with their friends.

Those lists and reviews will exist in Facebook but wont get repurposed to Blockbuster.com, Li said. 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 peoples Web actions, Facebook promised to only use information that members share, and wont give it to advertisers.

Read more here about Facebook picking Microsoft over Google.

Forresters 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 wouldnt 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 doesnt 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.

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