When Mark Zuckerberg first debuted his OPEN GRAPH API at Facebook F8 last April, he also took a major step forward in 'crowd-sourced' advertising. While followers were aghast at the privacy implications, less attention was paid to Facebook setting in place, the initial foundation of an advertising empire. This paradigm shift in how brands purchase online advertising could displace Google's old school model with Facebook's.
As noted in an AdAge report, the "ubiquitous LIKE is (now) currency for brands, and Facebook is giving them a new way to collect" with an ad unit labeled "sponsored stories." The unit will provide brand-related LIKES and also CHECK-INS more visibility where in addition to the standard news-feed status update posting, it will also corresponing ads to the right-hand side of the screen, similar to this Starbucks ad.
Before this automated ad can appear however, Starbucks would have to buy "sponsored story" ads from Facebook. And these actions can appear in ads even when they occur off Facebook - for example, a brand's Web site.
The product is divided into four possible buys for advertisers- 1) Page LIKES 2) CHECK-INS 3) "Application Play" and 4) "Page Posts. (Unfortunately, as of this posting, there is no news as to how much these ad units will cost advertisers.)
While we are familiar with Page LIKES and CHECK-INS, an "Application Play" works with a brand's app located on their Facebook page. For instance, if a brand like Ford had an app for users to upload photos, the 'sponsored story' that will show up as an ad might read, "John Doe used the Ford app to upload a photo."
Differing slightly, "Page Posts" allows brand advertisers to get more distribution out of their own posts. In this case, FORD would actually be buying a 'sponsored story' to further distribute one of their specific posts - and then again ti would appear in the newsfeed stream as well as the right-hand side of the page.
The downside of this new model is users will not be able to opt out. So if they take an action related to a brand, that posting could show up as a 'sponsored ad' no matter what is being said about the brand, either positive or negative. In the AdAge report, they noted an example where "if a user checks into Starbucks with a 'I hate this place, but it's the only coffee around,' then that's exactly what the 'ad' turns out to be."
A measure Facebook has added to counter negative reviews, is a "flag" button for "inappropriate content." A second option would be for a brand to only buy "Page LIKES" where the user can only click the LIKE button versus an opportunity to critique the brand.
The early adopters for this model include big name brands such as Coke, Levi's, Anheuser-Busch and Unicef. In the weeks to come, the 'sponsored story' product will be available as a self-serve option, similar to Google's Cost-Per-Click model.
So where does Facebook's new advertising vehicle leave Google? Does Facebook offer more targeted marketing and as Michel Lazerow, CEO of Buddy Media says, "amplify" the messaging in a space that currently is exposed to 600+ million users? According to EMarketer, Facebook earned $1.86 billion in worldwide ad revenue last year. Surely this model has the ability to double that revenue in 2011.
Since Google continues to lose in the social media space and Facebook's data mines are growing exponentially, might the social network also become the world's universal search engine diminishing Google's effectiveness in that arena as well? Your thoughts are only a CLICK away, or should I say LIKES.
Page from Facebucks & Dumb F*cks graphic novel