Content Matters

With nine-figure investments and multi-billion dollar valuations comes the expectation that Facebook can effectively monetize the pages in its rapidly growing social network.  So, it was no surprise that Facebook yesterday announced Facebook Ads, a new advertising network.

Facebook Ads will be focused on brand advertising.  They are positioning the ads as "socially aware" advertising, leveraging a user's social network, akin to personal referrals.  There are three components to Facebook Ads:

1. Social Ads: ads which are targeted to Facebook users based upon demographics compiled from their profile information, such as age, sex, relationship status, employment history and indicated interests.
2. Facebook Pages: Corporate ad widgets (formerly project Beacon) where corporations will be able to create corporate Facebook pages, placing an ad widget on the page which can be grabbed by users, in essence becoming endorsers of that product; and
3. Insight: Analytics and usage metrics fed back to advertisers providing aggregated demographic profile information of the types of users who are clicking on their ads.

These ads will be managed directly by Facebook; this is not part of the deal announced with Microsoft, which is focused on the sale of banner ads.

The profile-aware social ads make sense to me, though it depends how effective Facebook is at mining the interest data and matching that to potential advertisers.  While age, sex and relationship status can easily trigger some demographic ads such as dating services, that's pretty limited.  But if they can mine the interests, for example, to serve Prius ads to people who focus on the environment, that could be more compelling.

The corporate ad widgets could be effective, but will require advertisers to become much more creative than they've been until now.  Paul Kedrosky sarcastically envisions receiving a Coke Wants to Be Your Friend message, thinking "ooh I can't wait".  I think there are a limited number of products for which users may be openly willing to act as an endorser.  Apple would have little problem getting iPhone endorsers, as could Nintendo for the Wii.  Entertainment companies could effectively find endorsers for movies, bands and television shows and auto manufacturers have shown that they can drum up enthusiasm for at least some of their offerings.  The (Red) campaign, as featured in the Facebook sample to the right, would certainly attract users.  But most traditional industries will struggle in this regard.  I can't see too many endorsers for CPG products "boy, this new Tide detergent really cleans my clothes well".

In the early stages, products will either need to have a sense of "coolness" about them or perhaps be tied to social issues.  For example, environmentally friendly products could quickly find support among green-focused Facebook users.  These ads will work for enthusiasts, but finding passionate users won't be easy for many segments.  Users may be willing to refer their friends to products that seem cool or where they are viewed as an expert because of the endorsement, but they are likely to resist if they come across as a corporate shill.

Lots more details and analysis are available on the Facebook blog, Valleywag, Mashable, Read/Write/Web and Scoble,  while Om Malik asks if Beacon is a privacy nightmare.