Facebook Declares New Era for Advertising

Posted by: Rob Hof on November 6, 2007

As I write, Facebook CEO Mark Zuckerberg is announcing its long-awaited ad strategy. One piece is Beacon, a system that will let the social network’s members reveal their purchases, eBay product postings, and other things they’ve done on some 40 Web sites (so far) off-Facebook and have them appear on their profiles. That ultimately can provide advertisers with information to target ads to just the people most likely to be interested.

You can’t accuse Zuckerberg of modesty. In introducing Facebook Ads, he declared that “the next hundred years will be different for advertising, and it starts today.” Since a colleague in New York is the one attending the Facebook event, for now I’m depending on coverage from others, in particular TechCrunch, which is liveblogging the event. But here’s the gist from Facebook’s release, with the full version after the jump:

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. …

Advertising messages will gain distribution through what Facebook has termed the “social graph,” the network of real connections through which people communicate and share information. When people engage with a business’ Facebook Page, that action will spread information about that business through the social graph.

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.

Here's the release, followed by analysis as I get it:

Facebook Unveils Facebook Ads 60 Leading Consumer and Internet Brands Announce Participation in New Ad System

NEW YORK — Facebook Social Advertising Event, Nov. 6, 2007 — Facebook founder and CEO Mark Zuckerberg today introduced Facebook Ads, an ad system for businesses to connect with users and target advertising to the exact audiences they want. 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 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.”

The keynote opened the Facebook Social Advertising event, which also featured senior executives from landmark partners including Blockbuster, CBS, Chase, The Coca-Cola Company, Microsoft, Sony Pictures Television and Verizon Wireless. More than 60 major consumer and Internet brand partners were highlighted at the launch of Facebook Ads.

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.

More than 100,000 Facebook Pages Launch Today
Zuckerberg detailed how Facebook Pages allows users to interact and affiliate with businesses and organizations in the same way they interact with other Facebook user profiles. More than 100,000 new Facebook Pages launched today covering the world’s largest brands, local businesses, organizations and bands.

“The core of every user’s experience on Facebook is their page and that’s where businesses are going to start as well,” explained Zuckerberg. “The first thing businesses can do is design a page to craft the exact experience they want people to see.”

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.

Distribution through the Social Graph
Advertising messages will gain distribution through what Facebook has termed the “social graph,” the network of real connections through which people communicate and share information. When people engage with a business’ Facebook Page, that action will spread information about that business through the social graph.

Users can become a fan of a business and can share information about that business with their friends and act as a trusted referral. Facebook users can interact directly with the business through its Facebook Page by adding reviews, writing on that business’ Wall, uploading photos and in any other ways that a business may want to enable. These actions could appear in users’ Mini-Feed and News Feed, Facebook’s popular products that allow users to share information more efficiently with their friends.

Unique Ads with Social Actions
“Social actions are powerful because they act as trusted referrals and reinforce the fact that people influence people,” said Zuckerberg. “It’s no longer just about messages that are broadcasted out by companies, but increasingly about information that is shared between friends. So we set out to use these social actions to build a new kind of ad system.”

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. No personally identifiable information is shared with an advertiser in creating a Social Ad.

Social Ads can appear either within a user’s News Feed as sponsored content or in the ad space along the left side of the site.

Insights about Brand Presence and Promotion
Facebook gives marketers valuable metrics about their presence and promotion on Facebook. Facebook Insights gives 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. Facebook Insights is a free service for all Facebook Pages and Social Ads.

Protecting User’s Privacy
Facebook has always empowered users to make choices about sharing their data, and with Facebook Ads we are extending that to marketing messages that appear on the site. Facebook users will only see Social Ads to the extent their friends are sharing information with them.

For more information about Facebook Ads, please visit www.facebook.com/ads.

I can certainly see the appeal of moving advertising to a more social realm in which people who genuinely like a product can, almost passively, serve as brand ambassadors. I mean, look at the millions upon millions of branded T-shirts people wear, turning themselves into human billboards.

I'm not yet convinced that such social ads are the entire future of advertising (though perhaps it's unfair to ascribe such views to Facebook strictly from an event that, after all, is intended to whip up enthusiasm over the new system). I wonder if there will be diminishing returns if Facebook members' news feeds end up resembling movies full of paid placements. Any of my "friends" who post too many status updates that look like spam are going to get unfriended in a hurry. Or if they all end up doing it too much, I might go to the trouble of using another social Web service.

Still, assuming Facebook provides adequate controls on exposure to marketing messages, "conversational" or "social" or otherwise--and I won't know that until I try it out myself--this could be a step in the right direction for advertising, both for marketers and for the rest of us.

Reader Comments

Jeremiah Owyang

November 6, 2007 3:45 PM

We have thorough analysis of the MySpace AND Facebook Social Ads, please take a look at

http://tinyurl.com/344jed

Taran Rampersad

November 6, 2007 10:11 PM

Wow. Sounds like the same idea behind... little thing... can't remember...

Oh, there it is! The Internet, Google Ads!

But wait... one difference... is...

Oh, there it is! People actually get something instead of someone collecting money off of other people's likes and dislikes!

Heh. A new world of advertising? I don't think so.

Next?

Eco

November 7, 2007 2:18 AM

Perhaps...

This is an interesting way to negate trust and confidence.

We will see, likely a poor move and if we're suckers to fall for this disclosed breach of integrity.

We get what we deserve.

Chris

November 7, 2007 2:43 AM

facebook, youtube, myspace, google, facebook, myspace, youtube, google, facebook, myspace, youtube, google..

please you online bums. is there anything else prevailing on the internet?

sick of this useless crap.

xtoph3r

November 7, 2007 3:49 AM


Best of luck to Mr. Zuckerberg, and I hope he puts some of that eventual cash-out into a nice safe retirement plan, but the hype here smacks of dot-com era bravado, as do the exagerated valuations; $15 billion for FaceBook? Sure, why not? But I've been around this old Internet long enough to remember the early search-engine hype. Remember the $6.7 Billion Excite-@Home merger of 1998? By 2001 the whole things was bankrupt, and iWon purchased the excite.com domain for $10 million.

Tim Flick

November 7, 2007 3:56 AM

Possible Scenario?

k

November 7, 2007 4:34 AM

wow he reinvented spam!
aren't we all so proud of this achievement?

Mark Radoff

November 7, 2007 5:47 AM

We could debate that Facebook ads utilize a slightly different set of data for targeting users: their market segmentation data as defined by their network context and individual profile, rather than their intentions as indicated by search keywords.

I think the more important aspect of these developments is the bidirectional flow of information between consumer and company. I explore this a lot, particularly in the HR context, in my own blog and on www.liquid-cv.com. By treating the company almost as a person on facebook, we can gain improved insight to that company. Given the emergence of the "corporate citizen" concept, and the fact that companies are generally comprised of people, it's a natural and important development.

random

November 7, 2007 7:53 AM

So in other words, Zuckerberg is going to copy MySpace's and YouTube's ad strategy with a slightly prettier interface and claiming that interaction based marketing which began almost a decade ago is a brand new era of advertising which begins in 11/6/2007?

Sure Facebook will rake in a lot of cash this way, but I doubt that businesses will get a good ROI. After all, people come to social networks to chat with friends, read e-mails and look at profiles. They're not going to look for businesses to sell to them and they're not going to tolerate Facebook flooding with ads from partner companies desperate to justify their multi-million dollar ad venture.

What Zuckerberg is offering to marketers, is to put up a Facebook page and hope people come to them. Oh and he'll toss in some free widget so the marketer can see who took a quick glance at his or her page to make this look objective, analytical and grounded in numbers rather then the wild shot in the dark that advertising on Web 2.0 sites really is. I don't know how long it will take businesses who deal with Facebook and MySpace to realize that people don't care about their ads and they're just paying tens of thousands of dollars a month for a 0.2% click-through rate on their ads and an infinitesimally smaller rate of sales through them.

Ben

November 7, 2007 9:08 AM

The whole reason I got on Facebook in lieu of mySpace was the complete lack of advertising and clutter. I guess that has slowly been changing... I just hope this doesn't end up to be mySpace 2.0 *sigh*

Andy

November 7, 2007 9:25 AM

"By treating the company almost as a person on facebook, we can gain improved insight to that company. Given the emergence of the "corporate citizen" concept, and the fact that companies are generally comprised of people, it's a natural and important development."-----

If AT&T or Comcast were people, I would kick the living crap out of them. Wil I be able to this with Facebook's new "breakthrough"?!

Jens-Michael Lehmann

November 7, 2007 9:36 AM

All consumption, beyond the satisfaction of individual needs necessary for survival = luxuries, is only meaningful in a social context. May it be for signaling reciprocity, potency, power, and status. This is a fact that many people, marketers and else often ignore. But if you look closely at very successful, brands, products or ads - you will discover them catering to either consumers' fears/insecurities (very related to social acceptance and linked to success in your social context) or to their (or by proxy their childrens’) desires (simplified: sex sells), hopes and aspirations.

This is what makes the social (not new - has been going on for centuries) approach to advertising very interesting. What makes this novel - there never really has been an effective instrument to do this digitally. Banner ads and even micro-targeting were still just bad copies of the approaches used in old-style advertisement like targeting ads in publications or snail mail. Using social networks online is new because the networks of this extent itself are very new.

There is big HOWEVER though. The Internet has changed our lives already more than once. This new way of targeting products, services, and brands may very well significantly alter our relationship to material things in general. Brands today serve as markers for constructing your identity and (because all consumption is social) have become important means of self-expression. The digital use of social relationships will likely make the process of how individuals adopt brands more efficient and more ubiquitous. The result will be a form of inflation of the value that brands and consumption will have for identity building and self-expression. I wonder what will going to replace the STUFF.

YouTubeLess

November 7, 2007 12:11 PM

In a short word... 'Referral Programs'

Nice try young boys :-P

Roman Bils

November 7, 2007 12:42 PM

Facebook has always been innovative and strategic; however this gives the impression of a strategic release, not an innovative one, no matter how much Mark says "the next hundred years will be different for advertising, and it starts today.” To me this seems like just a reaction to their loss of major European markets, and they need to re-brand their advertising system to regain the billions of European marketing dollars. Just to finish off and contradict myself, this move by Facebook has shined new light on the power of marketing through social networking sites. Hopefully we see a reaction from Google and Elgg.

-Cheers

Brandon W

November 7, 2007 4:25 PM

Andy, I'm with you.
Can I now Throw a Sheep at Comcast?

tired of doublespeak

November 7, 2007 4:33 PM

What a load of double speak

Facebook jargon: "trusted refferal" = Realworld: "unpaid sales agent"

Facebook jargon: "fan-sumer" = Realworld: "fan sucker"

This "closed garden" program seems to appeal to all the losers that need to look to what their "friends" purchase and look at because they have no self identity - Lok what happened to AOL when they tried this type of BS

Facebook concerned about my privacy - hah - what a load of BS - they were not happy just stealing my privacy - no now they want to steal my friends and relationships

what a joke

ian McKee

November 7, 2007 7:26 PM

The Social Ads Idea is clever, very clever. But it’s not true word of mouth. Here’s why

In my book WoM is when the person makes the recommendation for a brand in his/her own words (this is why it is authentic and credible) and NOT when they get used as a carrier pigeon to deliver the brands message.

In FaceBook’s model people’s profiles are simply being co-opted to carry the brands advertising. It’s simply a clever way for brands to put their advert on your FaceBook profile

But – the advertisers with love it as it “seems like Word of Mouth” and YET they still get to control the message – and thus FaceBook will make lots more money.

Conclusion:
Is it a clever new way to advertise– yes.
Is it a good idea for brands to advertise this way – yes.
But, don’t see this as real word of mouth – my profile carrying your ad is not as effective as me telling my friends in my own words how good your product is.

Net net – do both, they work hand in had.

Glenn Gow

November 8, 2007 1:08 AM

Rob, thank you for your post. Here's my take ...

I’ve read the announcement about Facebook’s Social Ads. What are you thinking Mark Z? Did you ask your audience what they think about this? I know you asked your advertisers because they’re desperate to get real value out of the money they’re spending. (Full disclosure: Crimson posts ads on Facebook). I know you asked yourself how you can get more advertising revenue from your asset of 52 million members. But something is missing in this logic, and that’s value to the member.

I’d like to help address the question of: “Why would a member willingly help promote an advertiser?”.

Well I can think of four reasons, and I recommend that the advertisers who want to take advantage of social ads design their ads around these concepts:

1) Compensate members who forward ads. For example, “Earn Facebook points”,

2) Share the ad to help my friend. For example, “Here’s a job listing I thought you’d like”,

3) Share the ad to entertain. For example, “This is really funny, watch this”,

4) Share the ad to do some social good. For example, “Visit www.freerice.com and donate rice to the needy”.

To make this work, you have to provide value to your users. I sincerely hope that is a key part of Facebook's plan.

Rosa

November 8, 2007 5:15 PM

Zuckerbergs success is a fluke, facebook is the worst site ive ever seen, granted it might be good for oldies trying to hook up wth other oldies, its stupid. hes stupid, if he wanted to make some serious cash hed convert it to a 'im desperate, 40, and a virgin and am looking for someone...' site cos lets face it, the only people who go an facebook are those social outcasts with too much time on their hands.

Stretch

November 11, 2007 10:33 PM

I was talking with my nephew's wife, who is 27 and an avid user of myspace.com. I asked her whether or not she has ever clicked on an ad on any myspace page and whether or not she had ever purchased anything through an ad that appeared on a member's page.

Her response? "There are ads on myspace pages?"

Lord help the idiots that think advertising on social networking sites is a smart idea. It's ALL smoke and mirrors. The internet has not yielded any measurable impact on sales, congruent to the hype, and no one who offers advertising (Google, etc.) will tell you that.

Why would they? Advertisers are flocking to the web and Google (et al) are getting filthy rich off of their "irrational exuberance". This announcement is a rehash of past failures and hype. Good luck with that.

Chris

July 8, 2008 5:28 PM

"The Internet has not yielded any measurable impact on sales..." ???

That's funny, I know several companies who operate solely on the Internet and do well.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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