The Social

For Madison Avenue, Facebook just got a little less free.

Last week, the massive social network announced that brands, advertisers, and marketers that want to run contests or sweepstakes on its platform have to go through an approval process first.

Getting that approval could be a new revenue stream for Facebook: according to multiple sources in the marketing industry, they're being told that running a promotion in a Facebook application or "fan page" requires buying ad space too.

It's pricey. The minimum ad buy is $10,000 for 30 days, using Facebook's self-service advertising system, according to documents seen by CNET, or $30,000 for 30 days of Facebook home page ads. Priority in the approval process will be scaled, based on how much advertising space has been purchased. It's a move that one marketing industry professional called, in perhaps a bit of hyperbole, "a little Death Star-ish."

A Facebook representative declined to confirm and said the company did not have any comment beyond official documents released on its Facebook Marketing Solutions page.

Let's step back. Cracking down on contests and promotions might seem draconian, but it's actually important for Facebook: the U.S. state and federal laws that govern sweepstakes are extremely complicated, and by allowing only approved contests, Facebook is making sure that its bases are covered.

"Any promotion that any brand, product, or company would run has to have a terms of service against it," said Gunter Pfau, CEO of the Stuzo Group, an agency that has developed numerous Facebook contests and sweepstakes for clients. "Also, depending on the prize value, they need to be filed with various state regulatory agencies."

What, exactly, is new for contests? If a brand is running a contest on its fan page, it has to be handled through an embedded, separately developed application--not, for example, in the page's "wall." Promotions also can't involve Facebook users manipulating their user photos or status messages specifically for the contest.

Legal experts agree that this is necessary. "The (new Facebook) guidelines really cover only a narrow subset of promotions, specifically sweepstakes, contests, and similar competitions," explained Thomas Williams, a partner at the Chicago law firm Howrey, who specializes in trademark law. "That type of contest or promotion is governed by a myriad of state and federal regulations, so what I think Facebook is attempting to do here is merely shield itself from liability that arises out of its users' potential violations of these laws."

Williams continued: "I think it's a prudent and reasonable step on Facebook's part. There are lawyers who specialize in sweepstakes law, and there really are a lot of twists and turns to it."

One thing it'll also do, Stuzo Group's Gunter Pfau explained, is keep dishonest campaigns and promotions off the Facebook platform. "I think it's great news for consumers," he said. "I think what Facebook is doing is really laying these guidelines in place for companies to protect consumers more."

But what about the new ad spend requirements? Facebook has historically pitched its developer platform and fan pages as a free way for advertisers and marketers to tap into the power of "the social graph"--its 300 million-plus active users and their connections to one another. And while it's clear that the company sees these free pages and applications as a stepping stone for ad dollars--Chief Operating Officer Sheryl Sandberg, for example, regularly gives Madison Avenue talks about the company's "engagement ads"--it doesn't have a long track record of requiring advertisers to pay for something that used to be free.

"It makes sense for Facebook, but (it's) a little discouraging to advertisers," commented Alisa Leonard-Hansen, who holds the title of social-media evangelist at digital-marketing firm iCrossing. "Facebook is continually trying to discover new ways to monetize, and they picked up on the trend that advertisers were using their pages to run contests and other promotions. I think Facebook was looking to be able to benefit from this marketing trend."

The ad spend requirements, too, could be considered partial compensation for the new human resources required in Facebook's approval process. Each company running contests on Facebook now has a designated advertising sales representative, and fan pages will continue to have to be policed for potential violations of both advertiser regulations and sweepstakes law.

There might not be a lot of friction as the new regulations go into effect. Companies that don't run contests on their Facebook fan pages or applications won't be affected. Even some that do, especially small-scale fan pages that could easily go unnoticed by Facebook, won't have to change much. "Of course, there are going to be savvy marketers who skirt this and run (contests) under the radar," Alisa Leonard-Hansen said.

It really goes without saying the obvious: this is Facebook's service, and it can do what it wants with it. That doesn't mean marketers will stop grumbling. As one put it in a phone call to CNET, "This is another example of Facebook saying, 'Sorry, eat it, you've got no choice.'"

Guess what? Facebook is tweaking its home page design yet again--something that invariably seems to tick off members at first before they realize they actually don't mind that much. The company seems to have been previewing the new look to advertisers, one of whom forwarded the details along to industry blog Mashable.

It doesn't look too different. The biggest change is that Facebook's home page news feed will now be divided up into "top news" and a more real-time "recent activity" view.

The explanation:

"Facebook is simplifying the user experience on the home page by introducing Top News and Recent Activity streams. Now, when users log on to Facebook for the first time in a while, they will see the most important stories that they missed while they were away. From there, users can navigate to the real-time stream and toggle between both views throughout their sessions. In addition to making it easier for users to view content that is most relevant to them, this change also speeds up the time it takes for the home page to load and makes birthday reminders more prominent."

A screenshot from a document that Facebook sent to brand advertisers about an impending redesign.

(Credit: Facebook)

Note the mention of birthday reminders. On a given member's birthday, a pop-up version of Facebook's "gifts" application appears on that user's profile so that friends can purchase virtual gifts to display. The "gifts" feature is also currently the center of the fledgling e-commerce plans that Facebook has been bouncing around for quite some time now: It's currently the hub of its "credits" virtual currency, and advertisers can purchase sponsored gifts that members can give to one another. These have also been tested out with a select number of nonprofits.

For users, it sounds like Facebook is correcting some of the changes that members seemed to complain about the most with its last redesign. "Facebook has also put information back into the stream that people have asked for, including photo tags, friend acceptances, relationships, event RSVPs and group memberships," the explanation obtained by Mashable read. Also in there will be information about what a user's friends do on brands' "fan" pages, potentially increasing the exposure for advertisers and marketers looking to jump on the social-ads bandwagon.

Why so much redesigning? Facebook's executive team likes to pitch the company as a living, evolving product. At an event last week in Palo Alto, Calif., Chief Operating Officer Sheryl Sandberg underscored Facebook's belief in constant "iteration," a term you'll also often hear CEO Mark Zuckerberg using.

"The great thing about Facebook is (that) we are constantly evolving the site and constantly evolving the usage," she said. "People protested the new home page redesign, but engagement went way up and users continued to grow."

Pretty much everyone in the audience at Sheryl Sandberg's talk on Tuesday morning as part of New York Advertising Week understood the meaning of the slide she displayed that read "Nielsen and Facebook are in a relationship." A nod to announcements on Facebook's homepage "news feed," the "in a relationship" phrase is now a recognizable slice of Internet culture--much as social network Facebook itself has become ubiquitous.

And Sandberg, Facebook's chief operating officer, hopes it will be just as ubiquitous in the advertising world. Her goal on Tuesday was to formally announce the social network's "strategic alliance" with data and audience measurement firm Nielsen, starting with the launch of a product called BrandLift, a market research tool that can measure audience response to advertisements on Facebook "in a matter of days."

Nielsen Online CEO John Burbank joined Sandberg on stage to detail the basics of BrandLift. "We recognize just how increasingly important Facebook is within the whole ecosystem of media," he said, adding that it would be "crucial in building (marketers') confidence in using the Internet as a tool."

Sheryl Sandberg (file photo)

(Credit: Corinne Schulze/CNET)

Burbank confirmed what he told CNET News last night, that BrandLift measurement would eventually reach beyond the hugely popular social network. "(Brands) have asked us to extend this tool beyond Facebook," he said. "Working with Facebook, we expect to do that, too."

But for now, it's all about the social network. Sandberg pitched Facebook to the ad industry audience, as she has done in the past, as a hub for meaningful connections and communication. "Facebook is where people go when they want to share, when they want to connect, when they want to reach out to the people they know," Sandberg said, and she brought up instances as varied as grassroots activism in Iran and the two girls in Australia who updated their Facebook status messages rather than calling emergency services when they were trapped in a storm drain.

"I thank them, and we're glad, we're especially glad they got rescued," Sandberg said, noting that the girls' choice of crisis communication highlighted just how important Facebook is to personal connections in members' lives. "(But) next time you use emergency services, 911. Better option for sure."

What she also talked about: How fast Facebook has been growing. Last year at Advertising Week, she said, she announced that the social network recently had hit 100 million active users. This month, Facebook hit 300 million. And a full 50 percent of them still return to the site every day, Sandberg said, something that surprised her because she'd assumed that late adopters would be far less active than early adopters.

More numbers: Facebook's mobile applications are used by 65 million people. The average user spends 5.75 hours on the site per month. And the average user now has 130 friends, up from 120 a year ago.

Competition and skepticism
Sandberg had good reason to persistently highlight both Facebook's staggering growth and its newfound cultural significance: The advertising industry simply hasn't had a whole lot of faith in social media. "We've had some stumbles, some of our own making, and I think it's fair to say we have more of our fair share of critics," Sandberg said, mentioning that she'd once gotten a phone call from her parents asking whether she was looking for a new job because they'd read a report that Facebook was running out of money.

Facebook has also had to compete for marketer attention with the (at least for now) more buzzworthy Twitter, which rose to fast fame amid celebrity endorsements, a high-profile role during last year's U.S. elections, and the seemingly ubiquitious placement of "tweets" on cable news programs. A Twitter profile and a Facebook fan page can be directly competing products.

But the real skepticism surrounding Facebook's potential as a moneymaking power--at least as long as it remains supported primarily by advertising--comes about because, at least until this point, there has been a lot of marketing buzz-speak but not a whole lot of concrete numbers to measure its actual success.

"You want measurement, measurement you can rely on, measurement that you believe is valid," Sandberg said. That's why Facebook approached Nielsen as a respected third party, she explained.

Brands have found significant success with Facebook fan pages, which are free to create, she said. But adding paid advertisements through Facebook's "Engagement Ads" product can enhance those brand pages significantly, Sandberg explained. (It also means Facebook gets paid.)

"A year ago we introduced Engagement Ads. Rather than having to go to different sites or go to landing pages, consumers were able to engage with marketers directly with the ads themselves," Sandberg explained. "(They can) RSVP to the event, 'fan' a page, watch a video and comment, send a branded gift, or respond to questions from a marketer." As part of Tuesday's announcement, Sandberg announced that Engagement Ads have been expanded to include an easy way for Facebook members to request free product samples.

There were some skeptical questions from the audience, notably one that inquired about the poor searchability and indexing features on Facebook profiles and fan pages. The audience member asked whether this was potentially being upgraded.

"The short answer, is do we want to take content and make you more easily able to find it, find it now, find it later?" Sandberg responded. "Of course. And it's something we're definitely working on."

On Thursday night, Facebook announced that it's launched its first official Twitter app--sort of. In a post on the company blog, Facebook announced that updates to "fan pages," public profiles for celebrities, brands, organizations, and what-have-you, can now be sent out through Twitter.

"Public figures, musicians, businesses and organizations of all types who've created Facebook Pages often want to share a status update, a photo or an event with as many of their supporters as possible," the post by Facebook employee Michael Gummelt read. "Celebrities may want to share personal news or charities may want to put out calls for help to both their Facebook fans and their Twitter followers, all at the same time."

This is basically something that many blogging and publishing services already do: offer a way to automatically syndicate a short blurb and a link onto Twitter. It's a no-brainer. But Facebook and Twitter have a complicated history. Facebook attempted to acquire Twitter last year, and Twitter turned the offer down. Then, earlier this summer, Facebook did acquire FriendFeed, a social-network aggregator that failed to gain mainstream traction but pioneered many of the real-time, streaming features that are now central to both Facebook and Twitter.

Relations between the two companies still seem to be a bit shaky. Facebook continues to roll out Twitter-inspired features like a souped-up search engine, a revamped "publisher" tool that can make status updates selectively public, and soon a stripped down "Facebook Lite" site that looks quite a bit like the ultra-basic Twitter.

Much has been said about Facebook and Twitter as the two forces vying for control of the real-time social Web, but little light has been shed on just how central a role the marketing industry has. The fact that Facebook's first Twitter app is exclusively for its brand-marketing "fan pages" highlights this. In the digital marketing world, the buzzworthy place for brands to be right now is Twitter--especially since this week Twitter started to elaborate plans for the paid accounts it's going to offer to businesses by the end of the year. If Facebook is going to continue to court brands effectively, it has to offer a quick and easy way to plug into that all-important "Twitter strategy."

What's less clear is whether Facebook will let ordinary users syndicate their profile updates to Twitter. Currently, they can bring in plenty of data from elsewhere thanks to Facebook's third-party developer API. You can import a Twitter feed into Facebook status updates or use third-party clients like TweetDeck to update Twitter status and Facebook status simultaneously, but you still can't opt to publish your Facebook profile updates elsewhere.

One exuberant guest at the Twitter-centric Mountain Dew taste test party, in a photo originally posted to TwitPic.

(Credit: Damien Basile, twitter.com/db)

NEW YORK--On a Monday night earlier this month, the projection screen hanging on the wall of a bowling alley in Brooklyn's bar-heavy Williamsburg neighborhood was displaying neither strikes nor scores, but columns of the Twitter client TweetDeck.

More specifically, they were streams of Twitter search queries for a number of terms that would make little sense without context, like replies to the account @mtn_dew and occurrences of the hashtag #newdietdew. That's because PepsiCo, parent company of the Mountain Dew soda brand, had rented out the bowling alley to throw a "taste test" party for its new "Ultraviolet" diet soda. And the guest list had been amassed not for its red-carpet potential, but Twitter influence.

Broadcasting to anywhere from between a few hundred to a few thousand Twitter followers, party attendees exclaimed that Mountain Dew Ultraviolet was "truly the king of sodas," "like drinking a rainbow...everybody knows the best part is the purple," and "THE summer cocktail mixer of '09." There was an incentive, too: a few tweets containing the designated hashtag would be randomly selected to win prizes, like an HDTV or a casino weekend package.

"Can I still win if I hate it?" someone in the audience muttered as PepsiCo digital marketing execs explained the tactics of the contest.

It ended up working out pretty well, with a Twitter search for #newdietdew revealing a surprising lack of negative responses to the taste test (which may or may not have to do with the fact that the new flavor was mixed with vodka that night). And it's a tantalizing strategy, given Twitter's status as the sexy digital app of the moment.

But though there seems to be no question these Twitter-marketing events can generate buzz, like Twitter itself, it's not quite as clear how the buzz translates into dollar signs. Running this kind of Twitter marketing campaign usually requires acknowledging that your only clear result may be that a handful of the Web's cool kids will be talking about your brand--at least momentarily.

"(The bowling alley taste test) was a great example of an event that was a mixture of social media influencers and also the organic community that has built up around the product," said Stephanie Agresta, global director of digital strategy and social media at public relations firm Porter Novelli, which put together the event. Aside from semi-prominent Twitterers, the event was filled with young and trendy-looking locals who'd RSVP'd through PepsiCo's Facebook fan pages and Twitter accounts. Did they look like they were having fun? Absolutely.

"In our day and age, our brands, our products are part of our community. They live with us in social networks," Agresta said. But the impact on sales of Ultraviolet Mountain Dew, if any, is going to be difficult to measure. Being regarded by digital-media aficionados as a brand that "gets" Twitter doesn't necessarily help drive up profits.

Giveaways and promotions for bloggers are nothing new, and in fact have earned the scrutiny of the Federal Trade Commission over how much disclosure is required when a blog post has been spurred by a monetary incentive. But it's more recent that marketers have started targeting individuals for their prominent Twitter followings, or in a riskier move, getting ordinary users of the microblogging service to spread a brand's account user name or hashtag en masse. Often, there's no incentive other than an invitation to a party or a long shot at winning a prize. And unlike, say, Dell's successful Twitter-only promotions or JetBlue's tweeted fire sales, there's not a concrete sale attached.

A 'whole lot of noise'
There's also the problem of crowd control. Using tweets as free advertising first really popped into the mainstream marketing industry in March, when candy brand Skittles replaced its entire home page with the Twitter search query for "skittles." It didn't last long, particularly when people realized they could display obscene messages on Skittles.com just by attaching the word "Skittles." And while it was a momentary sensation on the Web, it was less clear as to whether it actually did much in the way of marketing success.

"You can use Bitly-type links that have specifics and analytics baked in," suggested Laura Fitton, who advises companies on Twitter strategies at Pistachio Consulting, "(but) you need to have a pretty clear business goal to know whether it worked...Were you trying to raise brand awareness? Were you trying to get a certain amount of traffic to a certain page? You have to be measuring the actual business role you were trying to get done."

Success from Twitter buzz, especially when it involves brand loyalty from influential users, requires a continual "conversation"--and that can make results even more difficult to quantify. That's because even if people are tweeting, the Twittering masses can't always be counted on to listen.

"I think the 'influencer' model gets tempered on Twitter because the message is just as important a role in whether a message propagates," Fitton explained. Prominent Twitter users, she said, "are saying 20 to 60 things a day. Not every message takes off."

It's more reliable when you're dealing, of course, with the iPhone-toting hipsters who made up the crowd at the Mountain Dew party earlier this month. Not only do Twitter's uber-chatty twentysomethings want everyone to know exactly what they're doing at the trendiest bowling alley in Brooklyn's trendiest neighborhood, but their friends will probably listen--they, after all, want to know what's going on.

"People want to share what's going on with their lives, with their friends and family, and especially in the world we live in and the generation which this product is geared toward," Stephanie Agresta said. "Millennials, especially, feel that they live an interconnected life and that their lives are always on display."

And savvy brands have found that even if profits aren't clear-cut, they can use that Twitter buzz to keep up a loyal following--even with a small base--rather than to broadcast a brand's hashtag all over the Web and hope for profits. Take Bonobos, an upstart menswear line based in New York, which has been using its Twitter account to ask a "question of the day" pertaining to everything from what to name a new style of pants to which colors a Bonobos polo shirt should be sold in. Throughout the month of July, it held a campaign called "Tweet for Trunks," in which every day a random user who'd tweeted the #bonobos hashtag in response to a question would be awarded a free pair of swim trunks. It led to "a little bit" of an increase in traffic and sales, CEO Andy Dunn estimated.

But Dunn told CNET News that he's generally skeptical of social-media marketing. "There's no competitive advantage to it, everyone has access to it, and there's a whole lot of noise," he said. Where he sees the most potential in harnessing Twitter for Bonobos, which retails exclusively online and targets trendy men their 20s and 30s, is in how he can invite customers into the business process. "What I see from our customer base is just a real desire to participate in what we do," he said, adding that his strategy was inspired in part by ultratransparent, Twitter-savvy retailer Zappos. "We're going to have a real product development feedback loop."

As for the raw Twitter hype machine, Dunn said, that's overrated.

"Are we really even interested in people who just want to follow us to get a free pair of swim trunks?"

As the 'Superbad' character McLovin taught us, a name change can make all the difference.

(Credit: Columbia Pictures)

It's out with the not-so-old and in with the new for AOL CEO Tim Armstrong as he commemorates 100 days at the helm of the dot-conglomerate. Less than a year after AOL launched a new brand called "MediaGlow to encompass all its publishing properties, the company is getting rid of the name and reestablishing it as the far less cute "AOL Media." The company's advertising division, Platform-A, is now "AOL Advertising."

And the properties grouped into the "People Networks" division that was established when AOL acquired social network Bebo (for way too much money) will be worked into three new divisions: AOL Communication, AOL Local and Mapping, and AOL Ventures.

The announcements were made at the latest stop for the "100 Days of Tim Armstrong" party train, a company "revival" meeting in a massive air-conditioned tent (yes, like an evangelical preacher, Tim Armstrong threw a tent revival) in which employees were encouraged to post to Twitter about the goings-on and tag it all with #aol100.

Business Insider was watching the tweets roll in, and picked up on Armstrong's announcement of the division name changes.

But on a more serious note, this does represent a strategic shift in direction for AOL, at least on the marketing front. Brands like Platform-A and MediaGlow seemed to consciously avoid the AOL moniker, which still hasn't shaken off the connotations of late-'90s dial-up access. Armstrong, it appears, believes that keeping "AOL" in there will actually make things stronger--he comes, after all, from Google, which proudly displays its primary-colored logo on virtually all of its properties. At the very least, it'll express a bit more internal faith in the viability of the AOL brand.

Maybe they can do a "you've got mail" mashup remix while they're at it.

UPDATE at 5:21 p.m. PT: Reader David Montgomery made some hilarious art for the occasion, inspired by the poster for the new movie "500 Days of Summer":

(Credit: David Montgomery)

The fan box for Coca-Cola.

(Credit: Facebook)

Here's something new from Facebook: the "fan box," which is a new tool for celebrities, brands, products, companies, and other entities with Facebook "fan pages" to effectively embed their Facebook presence into their Web sites.

That means that if you go to the Web site of a participating brand, like Coca-Cola or Lance Armstrong's Livestrong nonprofit, you'll see a widget that lets you add that brand as a "fan" on Facebook, which subscribes you to its updates, as well as a feed of updates and an array of profile photos from members who have already proclaimed themselves to be fans.

Facebook is hoping that people will find the "fan box" to be extremely easy to install, so that it's a no-brainer for companies and sites that might not be quite up to speed on technical expertise.

This is a big deal as Facebook continues to expand its presence beyond its famed blue-and-white walls, and keeps pushing the message that its 200 million-plus user base is an invaluable resource for marketers--especially interesting since brand promotion is something that MySpace once had a lock on in the social-networking world. The Facebook Connect log-in product is now installed on over 10,000 sites, and one start-up executive told me Tuesday that it's boosted their user registration numbers so much that he's astonished the company doesn't charge for it.

And last month, Facebook launched a tool called the "live stream box," which embeds a stream of the social network's Twitter-like "status updates" pertaining to a given event, much like the one that CNN and MTV used for this week's memorial for the late pop legend Michael Jackson.

As the recession rapidly sucks the momentum out of Web 2.0's heyday, with it may go one of the era's most defining terms: the job title "social media expert."

For the past few years, people who identify with that title--as well as social media consultants, social media strategists, and social media marketers, depending on what they want to call it--have been unavoidable in the Web 2.0 social scene. You'd meet them at the endless litany of industry cocktail parties, at Tech Meetup events on both coasts, and at the likes of the Web 2.0 Expo. A search for "social media expert" on business networking site LinkedIn yields 175 results. "Social media consultant" yields nearly 400, and "social media strategist" about 300.

These are the folks who work with client companies, many of whom didn't have much of an existing Web presence, to school them in how everything from Facebook apps to Digg badges to Twitter accounts can improve their marketing strategies. And as talk of social platforms and microblogging began to dominate the tech press, there certainly was demand.

"They just come running in screaming, 'I need a Facebook page, I need a blog, I need Twitter!' without thinking about what (the company wants) to accomplish as a business and what's unique about these tools," said Laura Fitton of Boston-based Pistachio Consulting. A former marketing professional, Fitton began consulting on Twitter and other social-media tools when friends pointed out she was already giving advice about it for free and ought to think about charging.

Advertising and marketing agencies, not to mention public relations firms, put out job searches for in-house social media gurus, but this was one job description where you didn't even need an employer--just a lot of followers on Twitter. Industry cocktail parties on both coasts were packed full of avid networkers with pockets full of business cards ripe for distribution. In other words, if you could talk enough about monetization, conversational marketing, social capital, and viral distribution in order to land that first client, you were all set.

The problem? Much like the digital marketing craze that briefly swirled up around virtual world Second Life, which led to a nasty, well-publicized backlash, there was plenty of opportunism and bad advice.

"How you find expertise is a big problem," Fitton said. "You could go to a very established advertising or PR agency, and if they don't have that expertise they're going to say as much crap as a carpetbagger who's trying to be a 'social media expert.'"

One digital-strategies czar at a small media company told CNET News that a while back, before she was brought on board, her employer had enlisted a freelance "social media expert" to give the company a presence on Web 2.0's most buzzworthy communities. It was a disaster, she said. The consultant charged $200 an hour for what was effectively a bunch of Facebook fan pages and a Twitter account that most full-time staff wasn't particularly sure how to use. The final bill tallied almost $40,000.

Another marketer related that she once met with a media property in the health sector to discuss how it could have a presence on social-networking sites. The potential client was skeptical, since its marketing team had previously met with a social-media consultant who suggested the best strategy would be to create a Facebook app that let members give their friends virtual venereal diseases. The client, it seems, was left a bit horrified.

Jeff Carvalho, a consultant who specializes in working with street fashion brands and other youth-oriented companies, argues that the "social media expert" is not going to go away, but the ones who make it are going to be those who do the job right. "I'm more or less playing watchdog over the guy that (the company has) hired," he said. The role of a social media consultant, he said, should be to school the brand's community relations types in the likes of Twitter and YouTube, and then leave the ongoing strategy to the people who know the most about the company and its field.

"You need to find somebody (who) believes in the product, maybe somebody that's an evangelist, and really help that person get the job done online," Carvalho said. "You can't expect a person (who) knows the tools to also be able to genuinely go into a community and ignite people to start talking."

Research firm Gartner estimated last fall that a full half of companies' "social media campaigns" will be unsuccessful, pouring some cold water on the hype surrounding buzzwords like "app-vertising" and "engagement ads." The problem, analyst Adam Sarner said at the time, is that too many companies fail to keep the interests of the community in mind.

And even would-be successes are at the mercy of social-media sites, too. Fast-food chain Burger King got plenty of buzz for a "Whopper Sacrifice" app on Facebook that jokingly encouraged members to delete people from their friends lists in order to receive a coupon for a free hamburger, only to see the application pulled by Facebook, citing that it "ran counter to user privacy by notifying people when a user removes a friend."

"A lot of them will flop," Laura Fitton said in agreement. But "they say fully half of advertising money is wasted, we just don't know which half. The beauty of social media is that we know exactly which half." Not only do we know which half, but when a social media campaign goes the "epic fail" route, it's plastered all over the Web. The same Web 2.0 tools that marketers are so easy to use--Twitter, Facebook, blogs, forums--can be turned against them in an instant when the community, or at least loquacious bloggers, decide to start ranting.

Given the financial climate, too, companies and brands are more likely to pursue a "handle with care" strategy rather than haphazardly putting themselves on Twitter and Facebook--or hiring someone to perform that task for them. There is, at this point, a blogosphere's worth of free advice and examples on what worked and what didn't. They can read about Dell's success offering promotional deals on Twitter, and the unpleasant results when environmental activists turned a video-remixing contest for the Chevy Tahoe into an anti-SUV public service announcement engine.

"I think things do need to fail because that's how we learn," Fitton said. And not only will many of these marketing campaigns fail, but so will a big chunk of the opportunistic consultants who've seized the chance to mint themselves into experts. For those who have established a solid reputation, a shakeup isn't necessarily bad.

"When the first Web bubble happened," Fitton mused, referring to how tough times can put a welcome damper on an industry gold rush, "we (marketers) kind of breathed a sigh of relief."

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.