Sunday, September 02, 2007
Directed advertising on Facebook
Facebook plans to provide personal information to advertisers, but will it help or hurt the website? On one hand, Facebook needs to increase profits to entice potential buyers. But his could come at the expense of cheesing off users, who may find it invasive. Many are turned off by the concept of companies knowing what they’re into.
There’s a wealth of information out there about why directed advertising, which shows you ads for products you are more likely to want, functions effectively; people don’t mind advertising as much because they don’t perceive it as irritating, and companies get a higher click-through rate.
The ways Facebook has implemented this kind of openness has received mixed reactions. Facebook’s got into hot water when they added listings of all the recent activities in your user group. However, their public API has been well-received. MySpace has not opened their website up with a similar offering, so this sets them clearly apart from the competition.
My personal feeling is users may find it invasive in theory, rather than in practice. Users are already exposed to hundreds of advertisements in their browsing day, and other advertisers are already using such placement technology. Additionally, my own research suggests that, in the case of MySpace, people who use social networking sites are more likely to naturally self-disclose information. That is, they are more open with information about themselves. For this reason they may find directed marketing less offensive than, say, a message board devoted to techno music or computer security.
The downside for Facebook would really be if people started putting in bogus information to foil the directed campaigns, much as underage MySpace members put in fake birth dates when registering. This would reduce clickthrough rates and overall effectiveness of directed advertisements. But if Facebook is successful, and especially if this advertising entices a buyer in the next year, directed marketing could become more prominent in online communities.
There’s a wealth of information out there about why directed advertising, which shows you ads for products you are more likely to want, functions effectively; people don’t mind advertising as much because they don’t perceive it as irritating, and companies get a higher click-through rate.
The ways Facebook has implemented this kind of openness has received mixed reactions. Facebook’s got into hot water when they added listings of all the recent activities in your user group. However, their public API has been well-received. MySpace has not opened their website up with a similar offering, so this sets them clearly apart from the competition.
My personal feeling is users may find it invasive in theory, rather than in practice. Users are already exposed to hundreds of advertisements in their browsing day, and other advertisers are already using such placement technology. Additionally, my own research suggests that, in the case of MySpace, people who use social networking sites are more likely to naturally self-disclose information. That is, they are more open with information about themselves. For this reason they may find directed marketing less offensive than, say, a message board devoted to techno music or computer security.
The downside for Facebook would really be if people started putting in bogus information to foil the directed campaigns, much as underage MySpace members put in fake birth dates when registering. This would reduce clickthrough rates and overall effectiveness of directed advertisements. But if Facebook is successful, and especially if this advertising entices a buyer in the next year, directed marketing could become more prominent in online communities.
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Great post, Andrew. Personally, I love advertising when it pays the price of admission. With all of the money we pay for cable TV these days, it is easy to loose sight of the fact that programming is often ad supported. My favorite magazine is TapeOp - a monthly on creative audio recording. This great little magazine goes out to subscribers free of charge, because it is all ad supported. And because the publication targets such a specific audience, the ads are all relevant and interesting to me. Fair to say I spend as much time drooling over the ads for boutique tube microphones as I do reading the articles.
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