Facebook Figuring Out Keys to Unlocking Advertising

Facebook today is like TV 60 years ago: an advertising juggernaut in the making, but still trying to figure out its natural ad format.

"We're sort of like 1951 television," says Mark D'Arcy, a former Time Warner ad executive who's now Facebook's director of global creative solutions, describing Facebook ads in a fascinating Forbes magazine feature about the social network's ad platform:

Social media offers tantalizing new possibilities for getting consumers’ attention in ways that are strikingly different from search and display ads, the two dominant forms of online advertising. Those older forms are, to varying degrees, aimed at prompting immediate or near-term transactions, but the biggest ad spenders want to create a long-term affinity for their soap, cars or beer. Most products are still bought in physical stores well after the ad was served. That’s why marketers still love TV, where they can tell their stories in a setting where people are relaxed and receptive.

Television didn’t take off as an ad medium until it moved from ads showing people reading a radio script to forms of advertising that fit the medium. Facebook needs to find the social media equivalent of the 30-second spot. It’s starting to do so by converting the primary gesture of social media—sharing—into something potentially even better for branding than TV ads: a supercharged version of word of mouth. It’s the most valuable form of marketing but tough to build quickly and even tougher to control.

The Expanded Premium ad is key to the new kinds of ads Facebook is pioneering. It's just a short post that goes on the right-hand side of the page. For example: "Rolling Stone calls Ides of March 'A big bruising thriller.' " Even David Fischer, who runs Facebook's ad business, conceded at the recent Advertising Week conference, "Honestly, it doesn't look that interesting."

However, it gets interesting when a consumer's friend clicks the Like button. Then, a line of text appears in the ad saying the friend liked the product, along with his picture. According to Forbes:

People are twice as likely to remember an ad if their friend is in it, according to the Nielsen Co., and they tend to click on it or share it with friends more often than they do plain-vanilla display ads. What’s more, their intent to purchase rises fourfold when they see "social" ads like this.

Facebook is looking to develop metrics to help advertisers gauge how successful their ads are.

It's an intriguing proposition. The history of Internet advertising has been focused on performance marketing. There's always a call to action: getting the customer to click an ad, or register for a site, or download a whitepaper, or sign up for an emailing list, or just buy right now. Facebook is looking to create a deep emotional commitment, readying the ground to support later action.

What do you think? Can Facebook re-invent Internet advertising? Let us know.

— Mitch Wagner , Editor in Chief, The CMO Site

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