We expected it, didn’t we. Facebook offering advertising targeted to peoples interests and likes. Now they offer this kind of advertising via their facebook flyers, reports TechCrunch.
The targeting offered covers the following sofar:
the Flyers let you target by country, city, gender, age range, political views, relationship status, education level, workplace affiliation, or any keyword in a personâ€™s stated interests. Itâ€™s that last option that could be really powerful. For instance, simply putting in different keywords into the Facebook Flyers ad-targeting page reveals that of the 19,951,900 Facebook members in the U.S., 101,000 are into rock climbing, 411,000 are into cooking, and 706,160 people are into traveling.
Regarding Facebook: there are already many rumours spreading. And depending on who is seen with whom in photos (which are so blurry you can’t see anything), the valuations for Facebook are going up and up. Currently at $15 billion.
According to the this article, MySpace is going into the same direction offering targeted advertising.
Andrew Keen is a well known critic of the whole Web 2.0 user generated („communistic“) cult of the amateur that is shaping our media consumption („prosumption“) these days.
Now, on Ad Week, he contributed an Op Ed about Web 2.0 being the death of advertising. It is quite a rant, you’ll be amazed:
Web 2.0 is, in truth, the very worst piece of news for the advertising industry since the birth of mass media. In the short term, the Web 2.0 hysteria marks the end of the golden age of advertising; in the long term, it might even mark the end of advertising itself.
At first I thought he must be joking. And then I looked up his name on Wikipedia – finding out that he must be serious about these things.
Don’t get me wrong – the new media production and consumption setup has changed (and will continue to change) and has had an effect on the advertising business. But instead of complaining about it, we should look at the possibilities and opportunities of the new landscape.
Many of the new technology enabled trends are somewhat user friendly, if not at least user-centric. So why should we not adopt and keep them? Really, there is no time for complaining. It’s a no brainer, that (mostly) bad advertising was first to adopt the new setup. Now we should try to figure out how to continuously create good advertising given the new circumstances.
Let’s not sit there like the music industry (as Andrew Keen writes):
Evidence of the crisis of mass media is depressingly ubiquitous. The recorded music business is in free-fall, the tragic victim of mass digital kleptomania.
There are alternative ways to sell music, Steve Jobs proved it with iTunes. A much more user centric model. Might not yield as high a margin as selling CDs in heavy jewel cases transported across the globe, but that’s the way it goes. Horse carriages were out of fashion at some point, too. Musicians like Madonna and Radiohead seem to get it.
The next couple of quotes are amazing:
What Web 2.0 is doing, compounded by the online consumer’s shrinking attention span and his or her hostility towards the „inauthenticity“ of commercial messages, is radically deflating the value of advertising. […]
As the scarcity of mainstream media is replaced by the abundance of Web 2.0’s user-generated content, advertising itself is being painfully commoditized. […]
No new technologyâ€”neither the false dawn of mobile, nor the holy grail of personalized, targeted advertisingâ€”is going to save the advertising business now. No, the truth is that advertising can only be saved if we can re-create media scarcity. That means less user-generated content and more professionally created information and entertainment, less technology and more creativity. The advertising community desperately needs more gatekeepers, more professional creative authorities, more so-called media „elites“ who will curate, filter and organize content. That’s the way to re-establish the value of the message. It’s the one commercial antidote to Web 2.0’s radically destructive cultural democracy.
It almost sounds like advertising is a form of art worth protecting for its own good.
Instead, the value of the message should come from relevance, in terms of content, targeting and timing – and of course the creative idea! (This, by the way, has always been the case. But not all advertising in the past has had good content, targeting or timing. Nevermind a creative idea.) A valuable message should still resonate, even when surrounded by a cacophony of user generated clutter.
Only now it is not so easy to spread bad advertising any longer, because the audience has more choices and more control.
What do you think people have thought about bad advertising in the last 50 years? Yes, they fast forwarded, or got a new drink from the fridge, or switched the channel. Or cursed at the TV. Or flicked over to the next page. Bad advertising always existed, and yes, it has always been a pain.
Good advertising, however, has (almost) always found the attention of the audience. And it still does. It has even become a lot easier for the audience to seek and find the content of those campaigns that they’re really interested in. At any time of the day. And it has become much easier to share good advertising, forwarding the content, (clips, emails, site URLs) to their friends.
While Web 2.0 has made it much more difficult for traditional advertising mechanism to work or break through the increasing clutter, there is also a lot of opportunity, new ways for attracting and involving users. Sometimes even beyond what traditional advertising mechanisms are capable of delivering.
Sometimes it feels like there never is a single day without news about Facebook. Today, the New York Times published an article about „investing in a theory“ – the fact that there is a hype about participating on Facebook, programming widgets, earning revenues in any way possible. But nobody really found out how just yet:
Now it appears that such exuberance has infused the expanding Facebook universe, even though no one has yet proved it is possible to build a profitable business with sustainable revenues on the site. Some developers report earning tens of thousands of dollars in advertising with the applications they have created. Yet their applications are mostly running ads promoting other Facebook applications â€” a situation that recalls the earliest Gold Rush miners, who earned a living selling shovels to other miners. And developers must cover the cost of hosting the applications on their own Web servers.
Nevertheless, people are as optimistic about this as they were about the whole industry some 7 years ago.
This summer, Lee Lorenzen, a venture capitalist in Monterey, Calif., who describes himself as â€œthe first Facebook-only V.C.,â€ started a $25 million Facebook investment fund and introduced a Web tool, at Adanomics.com, that assigns a monetary value to Facebook applications.
And here is a quick facts summary taken from adanomics:
- There are 348,289,583 installs across 5,160 apps on Facebook.
- These applications were used 25,756,704 times in the last 24 hours and have a combined valuation of $286,885,848.
- Facebook has approximately 40 million Unique Active Users in the past 30 days and a valuation between $10Bn and $15Bn.
- This translates to between $250 and $375 per active user.
… a combined valuation of $285 million! $250 valuation per user! Hard to believe, but that seems to be the reason why Microsoft decided to invest in Facebook. (A small amount that will dent their annual report like a rounding error.) So is this a real deal, or is it a hype?
The optimism of some of the widgets programming marketeers are so optimistic, that it makes me sceptical.
„We have the potential opportunity to create the new MTV,â€ (iLike)
Mr. Lorenzen values popular Facebook applications like Where Iâ€™ve Been (lets users show which countries and states they have visited), Texas Hold â€™Em Poker and Whatâ€™s Your Stripper Name (suggests what you and your friends would call yourselves on stage) at around $2 million each.
Most hope to either attract Facebook-users to their website and offers, some might publish ads on their widget canvas. But will that really be enough to sustain these valuations?
On a side note: If advertising is the model for generating any revenue, Facebook might actually perform much worse than other sites, because people are so familiar and engaged with the existing contents/widgets, that ad banner blindness will be much more common amongst these users than visitors of other media sites. That’s at least what some people say, and I think that is a reasonable assumption.
However, it could also imply that any click on a banner on Facebook is probably much more valuable than clicks on other networks. Simply because it wasn’t an accident or pure boredom. The user is actually interested in whatever the banner offered.
Soon enough, apparently, Facebook will start targetting ads using information they take from the profiles (makes sense, doesn’t it?), so ads should also become much more relevant.
The whole phenomenon of Facebook widgets definitely needs to be watched carefully, and I don’t think it would hurt for companies to test the water publishing small widgets and measuring the effects. But I am still sceptical about this exuberant optimism. Prove me wrong, I would be very much delighted to report on successful tactics any time!
So who is surprised about this move, really? Wasn’t it obvious that at some point, Facebook will leverage their knowledge about their userbase? As it says in a Wall Street Journal article:
Social-networking Web site Facebook Inc. is quietly working on a new advertising system that would let marketers target users with ads based on the massive amounts of information people reveal on the site about themselves. Eventually, it hopes to refine the system to allow it to predict what products and services users might be interested in even before they have specifically mentioned an area.
Sofar, targeting was only possible in terms of age, gender and location. In the future, targeting variables can include anything that users enter, e.g. personal information, planned events, music preferences, and much more, especially if information from widgets is included…
This sounds much like the well-feared transparent consumer. But apparently, Facebook will at least not disclose any information to advertisers:
Facebook would use its technology to point the ads to the selected groups of people without exposing their personal information to the advertisers.
The only thing that strikes me is the fact, that the ads will be within the news feed area. Of course, that’s an area with lots of attention, but I doubt users will like that! But, according to that article, Facebook needs these iprovements, because people spend a lot of time on the site, but don’t click on the ads…
Read/writeweb has an interesting observation. Apparently Amazon has started to place ads on their site that lead to products in shops on completely different sites. Some ads are contextual, others are not. And Alex asks, why on earth Amazon would do something like that, i.e. sending people out of their shop to go somewhere else?
Here are a few thoughts why it might make sense:
- People might remember that they found what they were looking for when visiting the amazon site. Sort of like Google whose tools are all more or less designed to send people away. AFTER they found what they were looking for.
- Amazon should know the parts of the site where they are loosing the most users anyway, simply because of natural drop out rates that always occur on sites. This way, they can at least earn some money with people who would never have purchased anything in the first place, too. Question is: would they also integrate the banners on pages with well-selling products?
- Learning about the click behaviour for products that amazon doesn’t list, is really clever (and paid for) market research into the gaps of their product offering.
- Who says, that margins of products sold are always better than advertising revenue. Most of the web 2.0 sites base their business model on advertising revenue rather than actual products. Amazon can probably offer a good, if not the best, targeting based on their recommendation engine. Does anyone know what they charge per click or per CPM? I bet it’s dearer than most sites you can put your ads on. (And it should well be worth the money!)
These are just four thoughts that immediately came into my mind, why it could possibly make sense for amazon to start placing ads on their site. Any other ideas, anyone?