09 November, 2007

Facebook's Social Ads Gamble

Social Ads? Okay, so the name is partially fluff. What ads aren't social? But naming conventions aside, Facebook's announcement of its new consumer-centric advertising model constitutes a major shift in the way messages can be delivered in the digital domain. I know, you’re probably thinking, “But how does it work, Jason? I didn't read any of the other 90,000,000 articles written on this same topic.”

Here's the basic concept. When a Facebook user visits a brand's Facebook page or external website in some cases, they'll be able to share and promote their interaction with the brand with friends. This user-initiated recommendation is then matched by Facebook with an advertisement created by the advertisers. Advertisers create these ads based on and directed towards demographic information obtained directly from traits Facebook users voluntarily post to their profiles, such as age, interests, hobbies, political affiliations, etc. Thus highly focused ads are directed "socially", from person to person, instead of from unknown external sources.

WTF!? (What the Facebook!?) Exactly. If it works it could be a watershed moment for Facebook and marketing in general. And that's really the question. Can it work?

(Click here to see englarged picture)

As I see it, there are a few hurdles, but all of them are surmountable. First, will users recommend products to friends? On the surface this may seem unlikely. But people do this all the time. In the real world it's known as "word of mouth" advertising. In the online world, I suspect brands will need to offer enticements to get the ball rolling, or make the recommendation process feel more like a game, but I don't think it will take much. People love to make their opinions known and share with friends where their minds are. Twitter is a perfect example of the level of social minutia people are willing to send and consume.

Until recently the assumption was that consumers didn't really care enough about products to visit their websites. Consuming the product was one thing, but who wants to read a website about their favorite brand of toothpaste? But a study conducted by ComScore throws strong doubt on this assumption. According to the study, "a majority of U.S. consumers visited at least one package-goods website during the three months ended in April, with search driving a substantial proportion of those visits."* And these visits were primarily initiated by the consumer. " Only 40% of searchers and 47% of non-searchers said they went to brand sites to seek promotional deals, compared to 73% and 58% respectively who went there seeking information and help."*

But is the demographic information advertisers are using to create their targeted messages reliable? After all, users voluntarily add this information, and are under no duress to make it accurate. Who hasn't fudged the truth a bit (or a lot, depending on how low your baseline is) in favor of themselves when creating an online persona. It's like online dating. Make yourself seem as attractive to other people as possible. They'll have plenty of time to be disappointed when they finally meet you.Ultimately, I think this is a non-starter. Yes, people lie. But I think mild exaggeration and understatement are the worst evils most people include in their online existence. After all, most online social linking (outside of dating) is between offline friends, already known entities. You can't get away with much when your friends are policing you. Plus, the point of online social linking is to find and interact with like-minded others, and lying defeats this.Of course, even outright lies make for useful information. If someone feels strongly enough about a particular idea, product or company to lie about it on their Facebook profile, they'll be interested in forwarding even incorrectly matched advertising messages to their friends and family.

Ultimately, I think socially distributed advertising's benefits will outweigh the detractors. Advertising sent within social interactions feels less like advertising and more like friendly recommendations, akin almost to viral marketing videos on YouTube. At least that's what Facebook and their prospective advertisers will be banking on. And I for one think it's great and highly recommend it!

*Source: Advertising Age - October 23, 2007 - "Study Finds Large Audience Online for Package-Goods Brands", Jack Neff (Look! I footnoted!)

Jason Bloom, Senior Avid Editor

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