Engagement opens doors
Facebook has released "engagement ads," an ad format that uses social networking to squeeze word-of-mouth-style impressions out of marketing messages. The service has been in private beta since August.
Ads typically appear on the right-hand side of the user's Facebook dashboard, prompting them to take some sort of action: comment on a movie trailer, for example, or RSVP for the season finale of a TV show, reports The Wall Street Journal. If a person takes action (writes a comment, RSVPs, becomes a "fan" of the sponsor), their response — and the accompanying ad message — is broadcast to everyone connected to that user:
At ad:tech New York last week, Facebook's Chris Pan explained the company's ad model revolves around a single premise: that marketing messages are more effective when they come from friends. Other ways Facebook encourages users to disseminate ad messages include providing sponsored virtual gifts, like "free" Ben & Jerry's ice cream cone icons on election day, Pan said.
"What we're trying to build is a platform where users can easily interact with the brand," Pan stated on a panel about advertising in web applications:
According to Facebook, 70 out of the US's top 100 advertisers have purchased ad space on the site since 2007. (President Elect Obama's campaign spent $370,000 on the site in September 2008 alone.) But despite interest in the platform, comScore's June report found Facebook's total share of US-based online display ad views was just 1.1%. In contrast, News Corp.'s MySpace.com received 15.9% of display ad spend.
Market conditions are also stacked against short-term success. The Interactive Ad Bureau recently projected US online ad growth will decelerate from 17% in 2008 to 14.5% by next year. Social network-based advertising is particularly vulnerable, mainly because means of measurement remain hazy.
Even so, ad space on Facebook and MySpace purportedly cost less than purchasing ad space on old-school portals like Yahoo or AOL. And because word-of-mouth marketing tends to be particularly lucrative for advertisers, Facebook charges more for engagement ads than any other on-site display ad formats.
Video ads are expected to fare especially well. According to Pan, they not only drive engagement and residual impressions among users connected to one another; the comments feature can be used as feedback tools for marketers.
In specific, he cited MTV's recent Video Music Awards advertisements featuring Russell Brand and Britney Spears. Based on user commentary provided on Facebook, MTV was able to fine-tune its campaign before the VMAs aired, Pan said.
The social network began broadcasting video ads last August, following a more ad-friendly site redesign.
People close to the company claim Facebook's revenue is expected to double to between $300 million and $350 million this year. Days ago, the company relaxed restrictions on marketers promoting alcoholic beverages. And in a flip demonstration of optimism, CEO Mark Zuckerberg denied rumors that Facebook was seeking VC funding.