NEW YORK--"We're here today to talk about how many friends you can have," Facebook Chief Operating Officer Sheryl Sandberg said in her keynote address at the AdAge Digital conference on Wednesday, the same day that Facebook announced that it had reached the milestone of 200 million active users around the world. "This is certainly something I thought about a bit before I joined Facebook, but in the last year, this has been a major question in my life."
But the major question she was addressing in her talk was a different one: namely, can advertisers reap dollars from a social network? It's the usual meat of any social network executive's talk at a Madison Avenue conference.
Her answer, obviously, was "yes."
Facebook COO Sheryl Sandberg
(Credit: Facebook)Facebook's new buzzphrase, at least when it comes to advertising pitches, is "active network," which refers to the group of people whom you keep tabs on in a social-networking context enough to know what's more or less going on with their lives. "The average Facebook user has 120 friends," but even with a number like 120, you're not actively in touch with 120."
But active networks can overlap, she said. Friends can comment on their friends' photos in which other friends are "tagged," for example, making an indirect connection. Or Facebook users can see virtual gifts that people whom they don't necessarily know have posted to mutual friends' profiles.
"This is a dramatic shift in how people are communicating," Sandberg said. "This really just changes things. 'Virality' is more and more common, and things can just spread more quickly."
She brought up a few examples in which the "active network" can add up to something big: a "flash mob" organized in a London subway station, where 4,000 people RSVP'd to an invitation on Facebook after seeing it spread through their friends' profiles; and the "25 Things" fad, in which the number of people tagged in "notes" on Facebook skyrocketed from just more than 1 million to more than 9 million.
Sandberg also cracked a joke about the viral spread of negative responses to a Silicon Valley Web company's interface redesign. It was a self-effacing jab at Facebook's latest revamp, which proved controversial.
Prior to joining Facebook last year as its COO, Sandberg had been at the upper echelon of Google's sales operations. So this was the sort of audience she's used to addressing.
And she quickly segued to what Facebook wants the advertisers to hear. The social network's "Engagement Ads" product can take advantage of "the same engaging properties as other parts of our site," Sandberg explained. Around Valentine's Day, for example, automaker Honda started a campaign in which the company "ordered" 750,000 virtual gifts--images of heart-shaped car fuel gauges--that members could give to their friends for free.
"Within four days, all 750,000 gifts...were gone, which meant that 1.5 million people directly interacted and engaged with Honda on this promotion," she explained. Well, sort of: it doesn't take into account the fact that some members could have sent multiple gifts. But all in all, there were more than 130 million page views on Facebook that brought up one of the Honda heart gifts.
Facebook first announced Engagement Ads last August.
Someone in the audience asked what she had to say about the widely held industry opinion that advertising on a social network just doesn't bring in a good return on investment. Sandberg's response was that while it might have been true in Facebook's early days, it doesn't hold true for the social Web anymore.
"Social media has had to do some evolution, some work to come up with the right ad products, and we find that we are really first on that path now," she said. "Banner ads that interrupt your experience, or text ads, we don't think work as well in this environment. It's actually just in the last year that we were able to launch ads on our site that behave the way the rest of our site behaves."
Facebook's all set to make a product development announcement of sorts on Wednesday in the form of what it calls an "Open Door" event featuring CEO Mark Zuckerberg and several other executives. The most notable portion of it--according to an e-mail from the company's press corps--is that it'll unveil "the next evolution of Facebook Pages."
Facebook Pages, as you may recall, are the free profiles that brands can set up to establish a presence on the social network, which now has over 175 million members worldwide. Members can sign onto the pages as "fans," much as they can add other members as friends. Brands, meanwhile, can use them to communicate with people who've added themselves as fans, embed third-party applications that they've built themselves or sourced from the thousands on Facebook's developer platform, and post promotional materials.
According to a blog post at Advertising Age, the redesigned "fan pages" will look a lot more like regular Facebook profiles, which got their own revamp last year. This means their content will be distributed on tabs, with external applications aggregated primarily on their own tab. Also, according to the AdAge post, activity from fan pages will show up more in members' news feeds, giving those brands more visibility. Beyond that, we don't have too much more information about what the announcement will entail.
What's not clear: whether there will be any kind of paid options for brands. Currently, Facebook doesn't make any additional money off of fan pages besides encouraging companies to promote them with either display ads or its more interactive Engagement Ads.
Advertising and marketing on social networks remains a touchy subject. Some companies have reported notable success, while others have experienced tepid results or even outright PR disasters.
On Tuesday, Pace University and a company called the Participatory Marketing Network put out the results of a survey that tracked the habits of consumers between the ages of 18 and 24. The results indicate that "brand pages" on social networks (other community sites like the News Corp.-owned MySpace also have similar products to Facebook's) are going to need some tweaking if they're going to be a legitimate marketing outlet.
That's because, per the survey results, while 62 percent of survey respondents said they'd seen a brand page on a social network, only 48 percent actually said they'd signed on as fans. And while 84 percent said that they notice the presence of ads on social networks, 74 percent said they click on them only "infrequently." Only 19 percent said they found social-network ads to be relevant.
"In a tough economy, many brands are looking to social networks as a way to engage customers and prospects in active dialogue, but many are still waiting for proof that increasing investment in this burgeoning 'channel' will yield measurable benefits," Participatory Marketing Network co-founder Michael Della Penna said in a release explaining the results. "While our research doesn't suggest that brands should turn away from social networks altogether, it does show that more work must be done to understand what drives participation and engagement within social networks."
There haven't been any big complaints about Facebook fan pages in general. But with Facebook's announcement on Wednesday, we're guessing that the redesign will be geared primarily toward making them more appealing to the brands and marketers who haven't warmed up to them yet. In these economic times, after all, it's all about the proven (or semi-proven) results.
Imagine seeing an ad on Facebook for a retailer like American Apparel or Target, and clicking a button to pass a 15-percent-off discount code to someone on your friends list. For advertisers looking to tap into the power of social networks, it sounds tantalizing.
That's the thinking behind "Engagement Ads," the new "experimental" advertising technology that social network Facebook unveiled last week. With the new program, members of Facebook can leave comments on participating ads, add the brands to their list of "fan pages," and use them to send friends virtual gifts. For the social network it's a small but important trial as it continues to combat the common wisdom that sites of its ilk can't survive on ad revenue.
But it's more vital for advertisers, who are eager to tap into the tech-savvy youth demographic that thrives on sites like YouTube and Facebook. "It's critical for (brands) to reach this market. They realize that," said Jeremiah Owyang, the Forrester Research analyst who announced Engagement Ads to the world on his blog last week.
But what Facebook calls "engagement ads" won't be the magical cure, because it simply won't work for most advertisers. Rather, it's a niche option that will probably lead to very successful campaigns for some brands--and high-profile blunders for others.
The reason why Engagement Ads aren't a universal solution is partially because it's tough to start with a little-known company and hope that Facebook users will be spurred to start playing with the ads. For a new movie, for example, the ad could play the trailer. But with other brands it's not so easy. "This is something new that kind of already requires awareness, because a lot of this is driven through peoples' perception of the product," said Dave Gentzel, co-founder of ad start-up SocialMedia, which praised the concept of Engagement Ads early on. In other words, it's tough to get the conversation started when no one's primed to talk about it.
"When you're sharing an affinity for something, it's kind of hard to grasp exactly what new products encompass without knowing what they already are," Gentzel said.
A new company or a brand that's not a household name will have a tough time jumping into the mix, but so will established companies that don't necessarily have public opinion on their side. Owyang suggested that those who fare best will be "brands that have heavy lifestyle affinities," or in non-industry speak, cult followings. That goes for luxury brands, automakers, and clothing lines; it wouldn't apply to brands for which conversations tend to consist of complaints, like cell phone carriers and airlines. (Unless that airline is, say, Southwest Airlines and manages to have eked out a cult following in spite of industry trends.)
Before signing on to something like Engagement Ads, companies need to have a grip on what the public--more specifically, the largely young and Web-savvy people using Facebook regularly--thinks about their products. The reasoning behind this caveat is that when a social advertising campaign falls, it falls hard and loud.
"Brands can't approach this as a one-off," Owyang said. "So thinking that they're going to do Engagement Ads, and that it's going to be success alone, isn't going to be sufficient." A social-media ad campaign can likewise help public perception, but that won't help much if there's already a vocal contingent that's willing to make the conversation take a turn for the worse.
A screenshot from one of the Chevy Tahoe user-generated ads that sparked a social-media disaster.
(Credit: General Motors)The quintessential example of this is a 2006 promotion by General Motors in which the automaker encouraged fans to "mix" their own video ads for its Chevy Tahoe SUV. Environmentalists, many spurred by activist group ExxposeExxon, caught wind of the gimmick and promptly used it to create anti-global warming ads. Consequently, videos that read "Global warming isn't a pretty SUV ad. It's a frightening reality" were featured right there on the GM-created Web site.
Imagine a similar promotion inadvertently used to further conversations about sub-par restaurant service or dropped calls on a cell carrier, and you've got a bigger problem. But in GM's case, the ads stayed online. And Owyang said that GM's response of leaving the anti-SUV propaganda intact is one to be emulated. "The brands should roll with the negative feedback, and listen, and incorporate some of that feedback in their upcoming products," he explained. "The last thing they should do is shut the ads down."
SocialMedia's Gentzel said that this is a situation that most advertisers aren't familiar with and that debacles like the Tahoe ad campaign could make them more reluctant to dive in. "There's a large amount of social responsibility that comes into play here," he said. "When you're sharing people's opinions and associating them with certain things, it takes a personal attachment that hasn't been used in advertising before." In Engagement Ads, companies can't hand-pick the portfolio of satisfied customers to appear in its commercials; it's handing that duty over to Facebook's hyped "social graph," and there's no clear word on how positive the feedback will be.
Facebook could help on this front, Jeremiah Owyang said. "What they need to do is develop resources for the marketers that will help them be more confident," he explained. "Maybe (the company could) develop a marketing conference for marketers on Facebook. Their developer conference in San Francisco was huge. Why aren't they doing this for the brands?"
The take-home point, really, is that Facebook still considers Engagement Ads to be an "experiment," that the new marketing tool is a small part of an offering that is by no means fully developed, and that interested advertisers should know this. The company's last foray into cutting-edge ads, the "Beacon" program, was a disaster fueled by bad PR. A high-profile Engagement Ads flop--think Tahoe mishap--could be bad news for everyone.
"Facebook is throwing all kinds of pasta at the wall when it comes to marketing and to see what sticks," Owyang said. "They haven't figured it out, and unfortunately, they're using brands as the guinea pigs and their customers. They really have to make it clear to their community what works and what doesn't, and develop best practices sooner or later."
In the meantime, I'm happy to tell my Facebook friends to wait until The House Bunny comes out on DVD.
This post was updated at 8:02 a.m. PT with comment from Facebook.
Facebook is making the advertisements on its site "smarter" and more interactive, Forrester Research analyst Jeremiah Owyang wrote on his blog Thursday. Owyang had been briefed by Facebook monetization director Tim Kendall on a Facebook initiative called "Engagement Ads" that is slated to launch later on Thursday.
Facebook confirmed the program to CNET News later on Thursday morning. "Facebook is conducting a trial of Engagement Ads over the next few months as part of its continual development of additional advertising concepts," a statement from the company read. "The initial three versions of Engagement Ads will allow users to make a comment, give a virtual gift or become a fan of a brand's Facebook Page directly within the ad. People also can view recent friends who made comments, gave a gift or became a fan both within the ad and as those actions are shared through News Feed."
The social network has already made it clear that it wants its ads to be more than just display ads. Users can give a thumbs-up or thumbs-down to an ad and then tell Facebook why they did so. The company's targeted Social Ads are also getting deeper: putting "pizza" in a status message can instantly turn up an ad for online-ordering company Seamless Web accompanied by a photo of a pizza.
Engagement Ads are different, though. Members can leave comments on ads that then show up in their friends' News Feeds, sign up as a "fan" of a product through Facebook's "Pages" feature, and use an ad as a way to send a brand-related virtual gift to a friend (if the brand signs up for this). The Engagement Ads module will show up on the home page next to the News Feed--it won't be replacing the display ads on profiles or Facebook's other Social Ads.
"To combat dismal click-through rates of traditional (social network) advertisements, these features emulate widgets and encourage users to increase member adoption, viral growth, and brand interaction," Owyang explained in his blog post. "Brands will only succeed with these 'WidgetAds' if they create content that puts community first, lean on new interactions, integrate with other tools, plan for the long haul, and change how they measure success--traditional Internet advertising tactics won't apply."
Facebook's history with advertising has been spotty, at best. Like most social networks, it relies on ad dollars, but its revenues remain low because social sites traditionally don't attract the click-through rates of, say, search advertising. When it launched its 'Social Ads' initiative last November, one major component--the allegedly intrusive "Beacon"--was met with so much negative publicity that Facebook's executives modified the program and apologized.
But Beacon hasn't gone away. Just last week, it spurred a class action lawsuit; while the suit's claims are shaky at best, it does show that audiences don't necessarily take too kindly to unfamiliar forms of advertising.
- prev
- 1
- next
