Facebook Ads: Slam Dunk or Daring Dud?

News Analysis: Will Facebook's Ads gambit blow a hole through online advertising or be a humiliating fizzle?

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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