Facebook announces Offers, mobile ads
First on the announcement list is Offers, "a free and easy way for businesses to share special discounts and promotions" that "let a business share a discount or promotion directly from a Facebook Page." These are the same as the coupons we heard about two months ago. Offers can be distributed through the News Feed or promoted as Sponsored Stories. People can redeem Offers via e-mail or on a mobile device.
Secondly, the company announced new placements for premium advertising and Sponsored Stories: both can now appear on the Facebook logout Page and the mobile News Feed. Sponsored Stories are posts from friends or Pages on Facebook that a business, organization, or individual has paid to highlight to improve the likelihood others will see them. In short, those ads in your News Feed are about to get a whole lot more encroaching.
Facebook also talked about its new "Reach Generator" premium ad distribution system, which improves not only reach, but the ROI of each post. Typically, less than 16 percent of a Page's fans see each of their posts. With Reach Generator, brands can select their highest potential post, and amplify its distribution through these new placements. Facebook says its tests have shown the new ads receive up to a 10x higher click-through rate than standard ads. Here are the official details of Reach Generator:
Make sure your fans see your stories
This "always on" packaged solution makes it easy for you to regularly reach and engage 75% of your fans with meaningful content from your Page. You focus on creating engaging content on your newly designed Page, while we ensure that your fans see the stories you are telling. Reach Generator is easy and simple to use. You post great, relevant content on your Page, and Facebook will automatically distribute it to your fans. We guarantee you will reach a majority of your fans and see great results.
Let's get back to the two new ad placements. Logout ads seem bizarre to me because I'm always logged into the social network. Still, Facebook says 37 million U.S. users logout of the service each day and 105 million do so per month (out of 161 million monthly active U.S. Facebook users as of December 2011). Plus, and there's no other engaging content on the logout page to distract them from the ads. Logout page ads will go live in April while mobile news feed ads are available today.
When Facebook revealed earlier this month that it had 425 million mobile users as part of its filing for an initial public offering (IPO), the company admitted that it was still not monetizing its mobile users. In other words, Facebook's mobile business is not making any money. In the Summary Risk Factors section, the filing stated: "Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results."
Facebook has managed to establish itself as a major advertising supplier because it has a unique offering to businesses that are willing to gamble a little with their marketing dollars. Advantages include being able to target users with a precision not found in most other forms of advertising. With its quickly growing user base (845 million monthly active users and counting), the company's social graph is exploding across all demographics, which only further fuels improved ad targeting, performance, and revenue as well.
If it can replicate the same success on the mobile side of things, the company will be able to create a respectable new source of revenue for itself. It won't be easy. Facebook will have to consider the usual potential privacy issues, as well as figure out how to work around the problems every advertiser faces in mobile: small screens, slower connections, and the strong relationship users have with their personal devices.
In summary, the big announcement today isn't Offers or the logout page ads. The big reveal today is that Facebook is entering the mobile advertising market.
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