Facebook's 'Engagement Ads' tests the waters

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.