How Facebook Advertising Works

Now just to be clear, we're not there yet. Ironically, and perplexing to me, I still get dating service ads on my Facebook pages. There is really no excuse for this. Facebook knows, based on my profile, that I'm married. There are any number of ads they can present to me that that would be more relevant. And why give me ads for Zwinky? Is it possible that Facebook has me confused with a ten year old girl who'd be interested in a visiting a virtual paper doll website? So we're still talking mostly potential here. To be fair, the Facebook's "Ad Space" is still pretty generic in terms of targeting.

But Facebook's new advertising programs represent the beginning of what social media advertising may look like. These new programs include Facebook Pages, Social Ads, and the very controversial Beacon.

Facebook Pages - As previously mentioned, Facebook has added a new "Pages" feature. This allows entities like Newfangled to create Pages for themselves on Facebook. You can join a company Page by becoming a "fan" in the same way that you might become a "friend" on a person's profile. Becoming a fan adds that Page's icon to your profile page under the "I am a Fan of..." panel. As the company gains fans, the people within each fan's social network may see that they became a fan in their News Feeds. When they see this action it becomes a kind of online word of mouth recommendation. Additionally, if the company is running a Facebook Ad Campaign, they can choose to target "Social Actions" in their campaigns. With this feature enabled, those people who fan the Page may see the Ad listed among their News Feeds. Companies can also use the Facebook messaging system to communicate with their "fans."

It may seem that becoming a fan of a company Page is a one way street benefiting the company. But becoming a fan also allows you to post to that Page's wall. This is a significant permission because everyone who views the page can see these comments. This is a gesture of openness from the company. You can assume that the brands that set up pages will be paying attention to those individuals that are willing to identify themselves with their brand. And if you every have a beef, you can always post it to their wall. These statements will carry a lot of weight with the brand, to be sure. This is conversational media in action.

Social Ads - Social Ads are very similar to Google AdWords except that rather than identifying and bidding on keywords, you chose the demographics and areas of interest to target for your ad. Like AdWords, you can define a maximum spend per day and bid on the amount you'll pay per click. You can also choose to buy impressions (views) rather than clicks. The ad format allows for a text title, a thumbnail image, and a brief text blurb. Facebook provides some basic performance reports and you can pause or resume any particular ad at will.

Beacon - Beacon is the most controversial of the Facebook advertising platform options. Beacon is a bit of code that any marketer can add to their webpages so that, upon specific actions like buying a book, subscribing to a service, or posting to a blog, the site can notify the visitor's Facebook profile of the action. For example, a Facebook user who goes to Blockbuster and rents a video may see an alert pop up informing them that Blockbuster.com "is sending this rental to the buyer's Facebook profile." Because the alert scrolls up from the lower right of the screen and then fades out, the visitor needs to be quick if they want to click the "No Thanks," option. Otherwise the movie rental action will be noted on their profile. Marketers who implement Beacon are supposed ask each customer if they want to opt into the Beacon service up front, but it's not a requirement. Some marketers may just start alerting and sending actions to Facebook profiles without the user ever choosing to implement the service.

The Facebook user does have an opportunity to change Beacon settings on their News Feed page where these alerts would be displayed. For each site that sends information to their profile they can make decisions like "always accept," "never accept," or "always alert me and let me choose which items get posted." But this Beacon control interface is a bit obscure, and if you don't know what it is (because you never explicitly opted-in on the other website), it could easily get accidentally approved without you really knowing what's being done.

This introduces some obvious privacy concerns. If I fail to click "No Thanks" each time, and I've approved the site to post, I may easily forget this setting and post things I didn't want to share. Imagine if I were to buy a special surprise gift for my wife and it gets posted and consequently broadcast to all my friends' News Feeds--including hers. It wouldn't be much of a surprise. Facebook should probably reverse the procedure so that actions require approval rather then require disapproval.

There is also no global opt-out for Beacon. I have to decide on a site-by-site basis. This is a particularly controversial issue since early previews of Beacon showed a global opt-out option. But the final release has no such option. We'll have to see how this plays out. I imagine that most people who are inclined to use Facebook in the first place and install applications that show their favorite books, movies, and just about anything else, probably won't be too concerned about privacy issues. However, reversing the permission process and offering a global opt out seems like a more considerate approach. Matt Dickman has an excellent write up and video on MarketingProfs showing Beacon in action.

Last Minute News Flash

Just before emailing this newsletter out, Facebook announced that they will indeed reverse the Beacon permission procedure. Users must opt-in for Beacon actions to added to their profiles. This is a great example for how consumers and brands are both benefited when they actively listen to each other and show willingness to make adjustments. Good going Facebook!


All in all, I am enjoying Facebook, and I see a ton of potential for marketing in social media. These are interesting days as the models and interactions get sorted out. In the meantime, though, if you already have a Facebook profile, feel free to friend me (just add "Web Smart Subscriber" to the friend request message). I'd also appreciate building up some fans on the Newfangled Page. I promise not to spam you with message blasts. There's also a Newfangled Group you can join if you're so inclined. And feel free to use the wall. I'll read and listen. This is a conversation, after all.