More ads to boost Facebook's revenue
Recently, the company announced a new suite of advertising products intended to insert more ads
into Facebook’s traditionally clean interface and to take more advantage of mobile ads, where the company has struggled.
The announcement was made at its first marketing conference, held at the American Museum of Natural History in Manhattan. For users, the announcement could mean many more ads on Facebook. For advertisers, the effort offers a chance to reach more users in more places.
Despite aggressively courting Madison Avenue for the past few years, Facebook has been an anomaly in the world of digital advertising. The ad units offered less creative options for advertisers who want to, say, take over the site’s home page or add moving text to an ad. Rather, the value in Facebook’s ads was in their data and personalisation.
The potential for more ad dollars was reflected in the company’s first filing for a public offering in February. At the time, analysts said the company was expected to be valued at $75 billion to $100 billion. But according to the filing, Facebook made only $3.7 billion in revenue last year, the bulk of that from advertising.
Until now, advertisers were largely limited to a variety of ad spaces that were positioned on the right side of the Facebook home page, in addition to creating their own Facebook pages. The announcement focused on a new set of “premium ads” that will run at different points in the site, with a special emphasis on ads running throughout a user’s mobile feed.
Mark Renshaw, the chief innovation officer for Leo Burnett Chicago, part of the Publicis Groupe, said that the announcement made Facebook “the biggest mobile marketing platform.” The announcement comes on the heels of a similar announcement by Twitter that it would begin a mobile ad programme.
At the conference, the company promoted other new features for advertisers. For example, by April, Facebook is moving all marketers’ pages to its new Timeline format which allows advertisers to have more dynamic pages for their own brands. In addition, anything posted on an advertiser’s own page – status updates, photos and videos – can be made into an ad that can pushed out to users’ newsfeeds and mobile feeds.
“If we want to take everything and make it social, we can’t do it alone,” said Sheryl Sandberg, the chief operating officer for Facebook, in her opening remarks to the marketers in the room. Chris Cox, the vice president for product at Facebook, said the new options offered advertisers “a big, fat story-telling canvas.”
Another new tool for advertisers, called Reach Generator, allows brands to focus on users more aggressively. If a brand meets the Facebook criteria of having a minimum number of fans (the company didn’t reveal the number) and posts more than a few times a week, the company will guarantee they reach 75 per cent of their fans with ads each month – a privilege they will have to pay for. Previously, a Facebook algorithm would only allow 16 per cent of brand posts to be shown in the news feeds of that brand’s fans.
Now advertisers will have to pay more to reach more fans, effectively shifting the balance from what is known as “earned” media to “paid” media. “The more fans we have, the more we pay,” said Ben Winkler, chief digital officer of OMD, part of the Omnicom Media Group.
“The Facebook platform is undeniably incredible, but we must acknowledge that our customer relationships there are not owned – they’re rented. That reality must color how our clients engage with their customers and their customers’ data.”
In the run-up to the conference, there was a lot of speculation in the ad industry that Facebook would finally use its vast store of data to serve ads beyond its own walled garden, and on the wider Web. But the company still seems focused on its own site, unlike its rival Google. Nate Elliott, a marketing and social media analyst at Forrester, said Facebook’s approach severely limited its potential for advertisers.
“The big opportunity here is not on Facebook.com, it’s how they help marketers better target advertising on other websites,” he said. Elliott said the company should take a page from companies like Google, whose DoubleClick ad network helps marketers places targeted ads across the Web. “The data is what’s valuable here. The worrying about the creative formats – this is not what Facebook is good at. They are good at making social experiences,” Elliott said.
“If all Facebook ever does is sell ads on Facebook.com, then they’ve failed,” he added. Debra Williamson,a social media analyst at eMarketer, acknowledged that the company had led the pack in social media ad revenue ahead of Twitter and LinkedIn, despite not using ad networks or having additional revenue streams like search. Williamson said that Facebook “certainly offers things that advertisers are not going to get elsewhere,” including the ability to aim ads “based on people’s expressed interests.”
The announcement was made at its first marketing conference, held at the American Museum of Natural History in Manhattan. For users, the announcement could mean many more ads on Facebook. For advertisers, the effort offers a chance to reach more users in more places.
Despite aggressively courting Madison Avenue for the past few years, Facebook has been an anomaly in the world of digital advertising. The ad units offered less creative options for advertisers who want to, say, take over the site’s home page or add moving text to an ad. Rather, the value in Facebook’s ads was in their data and personalisation.
The potential for more ad dollars was reflected in the company’s first filing for a public offering in February. At the time, analysts said the company was expected to be valued at $75 billion to $100 billion. But according to the filing, Facebook made only $3.7 billion in revenue last year, the bulk of that from advertising.
Premium ads
Until now, advertisers were largely limited to a variety of ad spaces that were positioned on the right side of the Facebook home page, in addition to creating their own Facebook pages. The announcement focused on a new set of “premium ads” that will run at different points in the site, with a special emphasis on ads running throughout a user’s mobile feed.
Mark Renshaw, the chief innovation officer for Leo Burnett Chicago, part of the Publicis Groupe, said that the announcement made Facebook “the biggest mobile marketing platform.” The announcement comes on the heels of a similar announcement by Twitter that it would begin a mobile ad programme.
At the conference, the company promoted other new features for advertisers. For example, by April, Facebook is moving all marketers’ pages to its new Timeline format which allows advertisers to have more dynamic pages for their own brands. In addition, anything posted on an advertiser’s own page – status updates, photos and videos – can be made into an ad that can pushed out to users’ newsfeeds and mobile feeds.
“If we want to take everything and make it social, we can’t do it alone,” said Sheryl Sandberg, the chief operating officer for Facebook, in her opening remarks to the marketers in the room. Chris Cox, the vice president for product at Facebook, said the new options offered advertisers “a big, fat story-telling canvas.”
Another new tool for advertisers, called Reach Generator, allows brands to focus on users more aggressively. If a brand meets the Facebook criteria of having a minimum number of fans (the company didn’t reveal the number) and posts more than a few times a week, the company will guarantee they reach 75 per cent of their fans with ads each month – a privilege they will have to pay for. Previously, a Facebook algorithm would only allow 16 per cent of brand posts to be shown in the news feeds of that brand’s fans.
Now advertisers will have to pay more to reach more fans, effectively shifting the balance from what is known as “earned” media to “paid” media. “The more fans we have, the more we pay,” said Ben Winkler, chief digital officer of OMD, part of the Omnicom Media Group.
“The Facebook platform is undeniably incredible, but we must acknowledge that our customer relationships there are not owned – they’re rented. That reality must color how our clients engage with their customers and their customers’ data.”
In the run-up to the conference, there was a lot of speculation in the ad industry that Facebook would finally use its vast store of data to serve ads beyond its own walled garden, and on the wider Web. But the company still seems focused on its own site, unlike its rival Google. Nate Elliott, a marketing and social media analyst at Forrester, said Facebook’s approach severely limited its potential for advertisers.
“The big opportunity here is not on Facebook.com, it’s how they help marketers better target advertising on other websites,” he said. Elliott said the company should take a page from companies like Google, whose DoubleClick ad network helps marketers places targeted ads across the Web. “The data is what’s valuable here. The worrying about the creative formats – this is not what Facebook is good at. They are good at making social experiences,” Elliott said.
“If all Facebook ever does is sell ads on Facebook.com, then they’ve failed,” he added. Debra Williamson,a social media analyst at eMarketer, acknowledged that the company had led the pack in social media ad revenue ahead of Twitter and LinkedIn, despite not using ad networks or having additional revenue streams like search. Williamson said that Facebook “certainly offers things that advertisers are not going to get elsewhere,” including the ability to aim ads “based on people’s expressed interests.”
It is going to be a bit annoying with the ads but since there is no other network as good as FB, it's something worth sacrificing.
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