Wednesday, November 7, 2007

[more on...] Facebook Unveils New Advertising Program
by Mark Walsh, Wednesday, Nov 7, 2007 6:00 AM ET
WITH ALL THE HYPE AND secrecy surrounding a New York fashion show, social networking site Facebook unveiled its new advertising program at a high-toned affair on Manhattan's West Side.

Standing before a packed room of top media and ad executives, Facebook founder and CEO Mark Zuckerberg told audience members the media industry was on the cusp of a once-in-a-century change because of the myriad interconnections among people made possible by the Internet.

"The next 100 years starts today, and it's going to be different," declared Zuckerberg without irony before laying out Facebook's new advertising options--which launched Tuesday and encompass sponsored pages, ads linked to members' activities, and a reporting capability for Facebook ads.

The new system also includes a feature dubbed Beacon that lets marketers ask Facebook members visiting their Web sites whether they want to tell friends on Facebook about a purchase or other action on their sites.

Taken together, Facebook is counting on the new targeted ad options to help justify its whopping $15 billion valuation, which until now has been based largely on its rapid growth to 50 million users.

The new Facebook Pages allow marketers to create their own branded pages on the site, which can include all the features familiar on personal Facebook pages--including photos, third-party applications, discussion boards and Flash animation.

The more intriguing part of the new platform is the Social Ads--small, banner-like ads tied to Facebook users' activities and placed on their profile page mini-feeds and the News feeds of friends on Facebook. (Members use feeds to keep each other posted on their activities.)

So, for example, a friend of "Tim" might receive an update in their news feed that Tim just bought an iPhone, and include Tim's photo as well as a small Apple ad with an image of an iPhone and a link to the Apple site. "When you combine social action and content, you get Social Ads, and it spreads virally," explained Zuckerberg.

Marketers can target Social Ads through a new self-serve interface on Facebook according to more than a dozen demographic and behavioral criteria--including country, age, gender, political views, movies, and relationship status. Ads are sold via auction on a cost-per-click and CPM basis.

Facebook will serve Social Ads on feeds to all members at this point, say company executives. "There aren't many sites where you can opt out of having ads shown to you,†said Facebook spokesman Matt Hicks.

In adition, users who sign up as fans of particular Facebook marketers also won't be able to opt out of appearing in Social Ads for those companies.

However, users can decline to share news of their latest DVD purchase or vacation booking by opting out of the Beacon program. Facebook members can make that decision on a case-by-case basis at the time of purchase, or can decide that they don't want it known that they've made any purchases from particular sites.

Chris Kelly, Facebook's chief privacy officer, said the company did not plan to modify its privacy policy in connection with the launch of its new ad system because none of the Facebook member information shared with marketers is personally identifiable data.

He emphasized that the new ad program is intended to create advertising that's more useful to users as well as marketers. "We saw a real opportunity here to democratize advertising," said Kelly.

Facebook executives, however, said they would listen to feedback from the site's users about the new ads and respond accordingly. Whether Facebook users will react negatively to the increased commercialization of the site is a big question following the announcement. If they perceive marketing has become overly intrusive, it could lead to a backlash in the form of reduced interaction on the site--or worse.

So far, those concerns haven't troubled advertisers eager to take advantage of the rich trove of user data on Facebook. Among the big-name marketers using some aspect of the ad platform at launch were Blockbuster, Coca-Cola, Verizon and Conde Net.

"CondeNet is a very good fit with the way Facebook works, so this is a great opportunity to align ourselves with the most viral thing I've ever seen," said CondeNet President Sarah Chubb. The online arm of publisher Conde Nast is starting with Social Ads for its and properties, and plans to enroll each of its sites eventually in the Beacon program.

"This allows us to take our brands out further to people we haven't touched yet," said Chubb.

Similarly, The New York Times has launched a new Facebook page to help build brand awareness and drive readers to its site. "It's the digital version of word-of-mouth--what could be better?" said Vivian Schiller, senior vice president and general manager of

But she added that The Times> for now is refraining from placing any Social Ads because of concerns about potential privacy issues and intrusiveness.

Overall, Zuckerberg said that it is launching the new ad initiative with 100,000 new Facebook pages including the large brands, local businesses, organizations and bands.

Mark Walsh can be reached at

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