I have a confession to make. I have been working in the online industry for the last 15 years, my entire adult life, but I barely click on banners.
Probably that’s one of the reasons why I love advertising on Facebook. The logic behind the system (“The best ads are those that are tailored to individuals based on how they and their friends interact and affiliate with the brands, artists, and businesses they care about”) that Facebook established in its early days, caught my attention, as it was revolutionary in an environment where intrusive (and often misleading) advertising ruled.
At Ybrant Digital, we have been dealing with advertising on Facebook since 2007. In those days, we had exclusivity on the sales side on some markets, and we sold other markets on a non-exclusive basis.
In 2008, Facebook have decided to remove all IAB standard advertising from the site, and move the industry into a new era. An era where the effectiveness of the ads is not based on the size or rich media, or on the specific search that one user is generating in a specific time frame. In those days, one early Facebook employee told me “One user is not defined by one search he’s performing on one specific moment. Users aren’t keywords.” I strongly agree.
We all know the history. Facebook first implemented the Social Ads format, then they launched the “Like” button, and then they introduced Sponsored Stories. A couple of months ago, they added mobile to the exposure of the same formats. The implications of all those changes for the online industry are enormous. And we are just at the beginning.
Early this year, at fMC conference in NY, Facebook announced several new premium formats for Premium Ads on the platform.
But the goal of this post is to discuss the future. Not the past.
Facebook’s goal is pretty clear (“Facebook’s mission is to give people the power to share and make the world more open and connected.”) And for sure, their main revenue stream (advertising) needs to be aligned with that goal.
So, what can we expect from the Facebook advertising strategy for the rest of the year? Some of their initiatives are public, and by focusing on them we can anticipate an exciting future.
Facebook Exchange will most likely be the next big change. Until now, Cost Per Click has ruled the industry but this is a Google metric, and not a Social Media metric. To buy on a real time basis, being able to bid exactly the right amount for the exact user we want to impact, is a huge differential.
Exchange-traded media is up 7x since 2010. Ad spending on AdX, Google’s exchange, is up 850% in 18 months. With Facebook Exchange, the trend is irreversible. If the slope stays this steep, it won’t be long till one out of every two media dollars flows through an exchange.
Ads on Facebook Search are also being tested these days. Paid search is more of 50% of the digital spend, and the effectiveness of ads placed next to search results doesn’t need explanation. Nor does the impact of this initiative as a new revenue stream for Facebook, and the challenge that it will mean for Google.
In 2003, Google launched AdSense, today called Google Display Network. During 2011, webmasters generated more than 11 billion dollars through the program. That means that advertisers have spent around 15 billion dollars on placing ads using Google system in 3rd party sites in 2011.
The Facebook “Display Network” will come to light in 2012 . Instead of placing ads based on the content of the sites, Facebook will be able to place the ads based on who is browsing the site. Again, the motto “users are not keywords” seems to be guiding the way forward.
Right before Facebook’s IPO, doubts around the effectiveness of advertising on Facebook arose. Eventhough the causes of these doubts are still not clear, it is clear that Facebook needs to improve tracking and analytics, to prove advertiser performance. Facebook Insights and Analytics will be a huge part of Facebook’s effort to impose a new set of metrics, in order to prove to marketers worldwide that Facebook Advertising works.
The most exciting bit is that all these initiatives are being developed and tested as you read.
New formats are in the pipelines. Facebook Offers have shown only 1% of its potential to drive sales. Mobile access (Facebook’s main focus and opportunity) just has only just started to show ads. Facebook Ads have now started to show social context on external sites, and Facebook native formats (such as Sponsored Stories) are now allowing 3rd party tracking systems.
Premium formats have also started to be served through the Ads API and. this will improve the tracking and implementation times of these formats, and drive new revenues.
As you can see, even though there are many advertising initiatives on Facebook, the challenges facing advertisers are big. From RTB to mobile, from serving more accurate and complex formats to increasing Facebook’s reach to 3rd party sites, Facebook is demonstrating again that Social Media advertising is only just beginning to take form.
For sure, it will be a complex scenario, as history is being written as we speak, and several initiatives require several test platforms, failures and fast development.
At Ybrant Digital, we will continue to help our partners to understand the changes, developing technology to convert opportunities into success cases, and being part of the biggest shift since the industrial revolution: Social Media.