Maybe Google should fear Facebook's ad system

Maybe Google should fear Facebook's ad system

Summary: Facebook rolled out its ad system and blurs the line between content and marketing quite a bit. It's a bizarre world where you can count Coca-Cola--or some other Facebook partner--as "friend.

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Facebook rolled out its ad system and blurs the line between content and marketing quite a bit. It's a bizarre world where you can count Coca-Cola--or some other Facebook partner--as "friend." It's also a world that could sneak up on Google's platform.

As the Facebook news broke, I couldn't help but be a bit skeptical about the whole thing. Where I come from advertising and editorial are supposed to be separate. Befriending something like a brand takes me into some weird territory (see gallery right). Nick Carr had the best line of the day when he noted Facebook is more like social graft instead of social graph. Dan captures most of the handwringing among bloggers. One talkback in my post and gallery yesterday used the "S" word--sell out. Rest assured the initial wave of backlash is coming (Techmeme).

But Facebook's crazy idea may just work. After mulling Facebook's system over for a bit, I think the social network may be on to something that's scary on many levels. To users this ad platform is probably the future--you won't escape advertising anywhere. And to folks that hate advertising that's an issue. However, if Facebook customers don't care the social networking up-and-comer is dangerous.

Should Google be scared of Facebook's system?

Judging from Google's recent moves--notably preannouncing an Open Handset Alliance that has nothing to show yet and that OpenSocial alpha code thingy--I'd reckon the search giant is a bit worried. And once I suspend my skepticism about Facebook's ad system for a minute or two I conclude Google should be worried. Let's assume Facebook's system plays well with its users--maybe folks do want to befriend brands and become viral marketing zombies. If Facebook's gamble pays off Google will be worried. Here's why:

  • Facebook has a massive amount of inventory to sell;
  • Marketers have been grumbling about the ROI of keywords;
  • And text ads are extremely impersonal;
  • Advertising is relationship based and you still can't beat word of mouth.

As of this minute, there is no slowdown in text advertising, but there's a reason Google is acquiring DoubleClick: Advertising is more than keywords. Marketers are trying to tap into consumer emotion, be useful and capture some of that Apple magic in a bottle. A keyword isn't going to cut it, but Facebook's system just might.

Once Facebook starts parsing the data, a marketer like Coke can say "hey Facebook I want all the high school kids I can find." Facebook charges a premium CPM, Coke gets the goods and consumers play along. Everyone is fat and happy (including the kids drinking a six pack of Coke Classic a day).

Is this going to creep out Nick Carr and folks like me? You bet. But if there's no Facebook revolt and growth keeps moving forward, no one's going to give a rat's ass about we we puritans say. And Google may be caught flat-footed by advertisers wanting a little more than a text ad and a dashboard of metrics.

Topics: Social Enterprise, Google

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18 comments
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  • Google has little to worry about

    In advertising, it's all about "impressions" - how many times people see your advertisement. Facebook has 30 million members that they can be advertised to. Google will advertise to 30 million people in the next few minutes. Until everyone who uses the internet has a Facebook membership, Google doesn't have much to fear.
    WiredGuy
    • Google has little to worry about

      Google has the potential to market to 30m prope in the next few minutes but how mnay actually abrob that message.

      Coming from a networked and linked community the Facebook has method has the ability to be more sticky...
      Girth.
  • For a handful of brands it'll be great

    For brands that have cultural cachet and a rabid fanbase in the predominant Facebook demographics (Nike, Apple, Xbox, etc.) it could be a great new avenue. My Mac-fanboy co-workers already adorn their cars with little Apple logos (I told them it instantly identifies them as some NOT to fear cutting off in traffic) so I'm sure they'd gladly hop onboard whatever the official Apple marketing campaign constitutes. But that's the exception rather than the rule. And once you get past those few brands that will resonate in this space I just don't see the long-tail (I hate using that buzzy word) that you need to really scale well as a broader advertising platform. Google's explosion in revenue hasn't been just due to the Amazons and Ebays of the world advertising on it, it's due to companies of every size and scale being able to grab a slice of the pie.

    I work in the advertising world and I don't hear anyone complaining about text-based, keyword-targeted search ads. The only knock on it is that it isn't sexy. But when a $50,000 search campaign can have a far greater ROI than a $5,000,000 TV campaign (which I've seen firsthand) you quickly get past any aesthetic knocks. The advertising world as a whole is in the midst of a major shift because the higher level of accountability that you get from the web is forcing advertisers to rethink their efforts and performance demands from traditional media. TV's still sexy and ego-gratifying for advertisers, but the bottom-line ROI is now much more a concern than it was in the past and that trend is only going to increase.

    Facebook's platform is essentially just a mix of behavioral targeted advertising (which already exists) with a bit of viral/word-of-mouth marketing. Word-of-mouth marketing can be the ultimate payoff when it works. But the problem is it's far too inconsistent and unpredictable to serve as a reliable foundation for any major campaign. It's also (by its very nature) not something you typically pay much for since the consumers shoulder most of the efforts.

    I'm most curious to see how this platform will eventually fare outside the walls of Facebook. Google has a rapidly growing giant in AdSense (one whose potential is still largely untapped by advertisers) and it's only growing stronger as they add more and more targeting capabilities and continue to scale into other forms of media. Until anyone emerges to truly challenge Google on that front across the web (and other media) as a whole, I think they will remain largely unphased by any new ad platforms.
    RustyShackleford
  • Naive advertisers duped by marketing companies

    Thanks to all you boneheads who've been duped by marketing companies into advertising on Google. Google is my search bitch. Ive used it tens of thousands of times and never bought anything from any of its advertisers or clicked on an ad. If you really want roi hire someone who's actually creative enough to get you into the top 5 search results for free instead of into a stupid banner ad that a browser plugin is going prevent from ever showing...
    Johnny Vegas
    • Hmmm, and Google's billions

      in annual income say you are wrong.
      No_Ax_to_Grind
    • There isn't room for everybody in the top 5 no matter how well you code -NT

      NT
      raycote
  • Two comments...

    "Where I come from advertising and editorial are supposed to be separate."

    You mean like ZDNet??? ;-)


    Actually, I can see this working quit well in many cases. Take a look at just about any "product review" site and you will see very loyal customers sopending toime to promote their favorite product/service.

    With kids, being part of the "in group" is everything. One kid buys and likes Nike you can bet that in a couple weeks all his buddies go out and get a pair. Think of how being "in" sold iPods. Consider how "tuners" (NOPI) all talk about what is the best way to get horse power from a lawn mower engine. :-)

    Will it work with every product? Prolly not, but then nothing ever works in every situation.
    No_Ax_to_Grind
    • I sure hope your wrong! Maybe it's old age but I am disturbed by this! -NT

      NT
      raycote
  • RE: Maybe Google should fear Facebook's ad system

    Gimbel's had reason to fear Macy's. Macy's had Santa Claus on its side. But they were in exactly the same business weren't they? Please write something that is actually "provocative."
    meniskos@...
  • RE: Maybe Google should fear Facebook's ad system

    The war is on between Google and Facebook. However, Google has a formidable war arsenal to fight with. First, they have 15000+ employees vs. Facebooks 350+ employees; and a huge amount of cash. So, they have more resources. But you're right they should not take Facebook lightly. What is Facebook really worth, though: http://digg.com/business_finance/Facebook_Valuation
    jessechan
  • What next? Ads tattooed on peoples foreheads for a $100 a month?

    This has zero chance of working! It is a desperate move
    that speaks volumes about the lack of vision at Facebook
    and partners.

    First
    The type of unpredictable shallow losers who would be
    willing to sign-up for this kind of advertising will want to
    attach their pathetic needy asses to successful brand
    names with cachet!

    Second
    The truly successful brand names don't need to and
    won't want to risk damaging their brand's cachet by
    having these kinds of low self-esteem losers marauding
    around uncontrolled as representative of their valuable
    brand names!
    raycote
    • I assume ....

      it's been a while since you've been around, eh?

      As noted above, how do you think Nike got to be where it is? Not through its advertising. How do you think most local small businesses get to grow? Not by advertising. By word of mouth. Facebook (and the others out there) is the mouth.

      Personally, I can't imagine kids signing up Coke as a friend, but I can imagine others. It will all depend on content and the 15 seconds of fame, the "coolness".
      FlyingsCool
      • And who knows,

        if Coke can come up with something catchy that people want to pass around, why not?

        Think YouTube.

        It's all coming together. YouTube is a tool. Facebook (and the others) is the operating system.
        FlyingsCool
  • Conversational Marketing - I'm Skepti-Cola

    Larry I'm also trying to pull back from my first reaction to Facebook's new "conversational marketing" hype but it's hard.
    *
    I think they (and you?) have been talking too much to the usually-insightful-but-wrong-this- time John Battelle and his conversational marketing folks.
    *
    I *like* marketing and feed my kids with it, but I get pissed when people put lipstick on the advertising pig and tell me it's not a pig. I like pigs (some people do not, so for them this is all even more ominous), but I want them to be clearly identified as pigs. When I want pork, I click the pig and eat. When I want info I don't want pigs in my way. Facebook would say they won't do that - just like Google said they would not mix ads and left side content. Until they mixed ads and left side content and then barely shaded the "advertising" section right below the query. On balance, when you deal with ads, it's all about shading things. Suggesting ads can underpin a virtuous conversation is going to lead to shady things, and more pigs with lipstick.
    JoeDuck
  • RE: Brand and Purchase Are Separate: Google Still Wins

    Brand is what people on Facebook will be willing to endorse. Purchase is separate. Brand is Coke. Purchase is the local Safeway. Unless the two are completely comingled, as in something like Dell, Facebook will get the brand ads, and Google will retain the more lucrative purchase ads.

    Look at it this way. Your friend buys a new gizmo and recommends it. Do you run slavishly out and buy exactly the same toy at exactly the same retailler? Some do, most do not.

    Facebook will create the appetite, but Google will close the sale.

    More on my blog:

    http://smoothspan.wordpress.com/2007/11/08/facebook-gets-em-interested-but-google-closes-the-sale/
    BobWarfield
  • competition

    Competition is good. Consumers will benefit, especially when the competitors don't stoop to litigation, FUD, or other dirty tricks to get a leg up on market share. I think the web is a big enough place for both to prosper.
    jefmud
  • Google should RIDICULE facebook's ad system

    I think Google should shun, ridicule, deplore, and most of all,
    abstain from facebook's ill-conceived ad model.

    Just because you can make money some way DOESN'T MEAN YOU
    SHOULD DO IT.
    Htalk
  • RE: Maybe Google should fear Facebook's ad system

    If an advertiser wants me as a "friend", they'd damn well better cater to EXACTLY what kind of ad, how often, and where I want that ad in my face. It's something to consider, but it's not going to replace current advertising models anytime soon.
    Joey1058