Facebook Takes Big Step Backward Toward Traditional Advertising

As we predicted back in its pre-IPO days in May, Facebook would need to give up on its current model of minimal and oddly placed ad units if it wanted to survive as a publicly traded company with a value anywhere near what it wants the stock market to think it’s worth. And as that stock price continues to hover at half of the IPO value, the company appears to have taken the first big step toward more traditional advertising, by testing a way for businesses to pay for ads that pop up in the streams of users who did not necessarily “like” that particular advertiser.

Until now, the only way for such spots to end up in a users feed would be if the user subscribed that company’s page. Otherwise, paid advertisement was stuck in the margins in either miniscule ad units or the controversial “sponsored stories” that turn one’s friends’ “likes” into paid ads.

According to TechCrunch, Facebook swears this just a “very small test,” but we don’t see how it could be any worse than the ads Facebook has now.

For years, businesses have spent untold amounts of cash trying to cajole, entice and occasionally outright buy Facebook “likes” from users. If this new ad model proves successful, it would inevitably — and no doubt instantly — shift advertisers’ focus from gaining “likes” to a more straightforward way of simply paying X amount of money to have your ad show up in Y number of user feeds.

The question is: Will all these companies that have invested so heavily in Facebook marketing be annoyed that all their work is for nothing now that anyone can buy their way into a user’s feed?

The Wall Street Journal looks at Facebook’s slow growth in the online ad business, where in 2011 it made 13% of what market leader Google earned in ad revenue, in spite of having around half a billion registered users.

Part of the reason, say analysts and ad buyers, that advertisers haven’t gone whole-hog with Facebook is that the value of a “like” is nearly impossible to quantify. And given that “like” is the only measure interaction users have with a company’s page, it doesn’t necessarily mean that the user actually enjoys or is interested in that product or brand. It could actually mean that the user dislikes the product so much that they “liked” the page merely to comment on the company’s Facebook wall.

As for you, the Facebook user (assuming you are one, which you may not be… in which case, sorry), the site promises it won’t flood your stream with paid ads (yet).

“We want to be thoughtful about how we introduce ads in news feed,” a rep tells TechCrunch, “so we have limits in place to ensure that people’s news feeds are not filled with advertising, but we don’t have specific numbers to share.”

As for Facebook’s bottom line, these in-feed ads would instantly boost the site’s revenue from mobile users, who currently see a minimum of ads on their devices. By pushing paid ads straight in with all the baby photos and inspirational quote posters, Facebook doesn’t have to worry about creating any sort of special unit specifically for its mobile sites.

Comments

Edit Your Comment

  1. samonela says:

    Ads on Facebok? I wonder what my AdBlock+ has to say about this?

    • TuxthePenguin says:

      My thoughts exactly.

    • Scurvythepirate says:

      That’s the fun part. These are not “ads”. They are sponsored posts. So they appear in your news feed. Not like they used to do along the side of the page. I do not think AdBlock will work on this.

      • bnceo says:

        You can probably block the image URL. Which might come from a folder on FB servers for sponsored posts.

      • Gambrinus says:

        I imagine someone will write a GreaseMonkey script to take care of them…but of course, that doesn’t help with mobile, which is where this stuff is really intrusive.

  2. HogwartsProfessor says:

    Grrr. I’m already hiding posts from people I’m friends with about politics, CFA, random baby and other things that are making me bawl right now, etc. Now I have to worry about ads too?

  3. Tegan says:

    I need to get off my lazy butt and set myself up on G+ so I can quit patronizing Facebook. I know that as users, we are the product and not the customer, but you have to draw the line somewhere.

  4. Whiskey Tango Foxtrot says:

    I use the SocalFixer add on to block ads on FB :)

    • Whiskey Tango Foxtrot says:

      Uggh we really need an edit button – Social Fixer.

      • ReverendTed says:

        I don’t know, I think you might be onto something there. I’m often lamenting the volume of “Gah”s and “Get OUT”s, and “Like, gag me with a spoon”s on Facebook. Who needs all those Los Angelenos, anyway?

  5. oldtaku says:

    “We want to be thoughtful about how we introduce ads in news feed”

    That’s so, so thoughtful of you.

  6. tucktan says:

    Facebook is free, if you don’t like it (or the advertising) there is nothing to stop you from using it.

  7. Lisse24 says:

    I got one in my news feed this morning. I marked it as spam and blocked it.

  8. MPD01605 says:

    I already skip over more things in my news feed because it’s less and less relevant. I see many things from a few people, and it feels more like my things are seen by fewer people. I know we can change how much we see from a person, but it seems that Facebook went and pre-decided for us. So now I don’t look at the news feed as much. Ads will probably make me even less aware of things in general.

  9. Chris Long says:

    I have never seen an ad on FB; didn’t know they have them ! In fact, have not seen an ad whilst surfing for a very, very long time…

    Guess AdBlock and IE7 Pro are doing their stuff…

    Prediction: FB’s ads will provoke a revolt from its purported billion users.