Here’s Why Facebook Likes Microsoft’s Atlas Ad Server

fbthumbsupFrom my Forbes.com blog The New Persuaders:

After spending years trying to dump its Atlas online ad-serving business, Microsoft reportedly is in talks with Facebook to sell the unit that helps advertisers and ad agencies place ads on websites and track their impact.

The news comes five months after Microsoft wrote down nearly the entire value of its $6.3 billion acquisition of aQuantive, of which Atlas was a part. Following its recent move to de-emphasize its own ad tech, Microsoft has been shopping the unit around, most recently to AppNexus. Business Insider reports that before Facebook talks began, the highest bid Atlas got was $30 million.

There’s no guarantee the deal will happen. But why is Facebook interested? Some speculate that it’s a way for Facebook to close the final technology gap on a plan for an ad network, similar to Google’s AdSense, that would place Facebook ads on other websites. Could be. But I tend to agree with one AppNexus Senior VP that there’s an even bigger goal that goes along with that: proving Facebook ads work.

That has been the No. 1 social network’s overriding task for the past year, especially since its underwhelming IPO. It has released vollies of case studies showing how its ads actually do spur sales down the line. But for whatever reason, most likely the difficulty of applying success by one company or industry with its social ads to others, many advertisers and agencies remain skeptical.

Atlas would enable Facebook to track the impact of its ads, which it’s already quantifying through a deal with Datalogix, which tracks in-store sales, not just on Facebook but on other websites as well. Privacy advocates are not happy about the Datalogix deal, and adding an Atlas-powered ad network won’t make them any happier.

But Facebook may finally be on the verge of closing the elusive loop between its ads and ultimate sales that result from them in a way that to date no one but Google has done really well and on a huge scale.

About these ads

No Brand Shakedown, Says Facebook–Here’s How Page Posts Reach Fans (Or Don’t)

From my Forbes.com blog The New Persuaders:

A lot of businesses with Facebook pages are up in arms about their posts showing up in their fans’ news feeds way less often lately. They and their ad agencies think Facebook did it deliberately to force them to buy ads to promote those posts, and they’re not shy about telling the world about it.

Facebook says it did change its EdgeRank algorithm, which decides based on various criteria which posts individual Facebook users see in their news feeds, in September, chiefly to help reduce spam messages. But the No. 1 social network, which has been intensifying its efforts to boost ad sales following a disappointing IPO last May and a swoon in its share price, categorically denies that it’s essentially blackmailing brands into buying ads by reducing their reach with fans. In fact, it says posts are showing up overall at about the same 16% they’ve been for awhile now.

Indeed, it has just opened up a new news feed option that runs only posts from pages you’ve “liked.” The move won the approval of Mark Cuban, whose anger in one tweet catapulted the issue into the public eye. But lots of questions remain.

Today, the company is trying to get the word out about how its system works with a “whiteboard lunch” for the press, with the aim of explaining how page posts find their way into news feeds. I’ll cover the highlights here starting about noon Pacific time, so refresh until about 1:15 p.m. for the latest. It’s pretty casual, not a formal presentation, so most of this will be a little scattered, but potentially useful to marketers.

Will Cathcart, product manager for news feed, comes on first to tell how Facebook thinks about the news feed. On an actual whiteboard! He says Facebook tries to figure out how interested you will be (Yoda, in his example) in each page post. If he comments on or shares or likes (or “hides”), say, posts from the Rebel Alliance, those will show up more often. But if he reacts in a significant way to a post by, say, Vader, that will inform future visibility of Vader’s posts. If he often complains that posts from, say, the Empire, those posts may drop out of his news feed entirely. …

Read the complete post at The New Persuaders.

Uh-Oh–Survey Says Most People Find Facebook And Twitter Ads Misleading

From my Forbes.com blog The New Persuaders:

To hear Silicon Valley and nouveau ad-tech types tell it, traditional advertising sucks. The best way to attract people’s attention and engage them more fully is to create ad formats that more closely resemble the activities people are already doing on a site–in other words, to make ads look less like ads.

That’s the idea behind so-called “native” ads such as Facebook’s Sponsored Stories and Twitter’s Promoted Tweets. Although various studies seem to indicate these ads are indeed more effective than standard banner ads–a low bar, it must be said–a new survey released today indicates that a lot of consumers don’t trust native ads. According to the survey by app advertising firm MediaBrix and Harris Interactive:

* 45% found Twitter promoted tweets misleading.

* 57%  found Facebook sponsored stories misleading.

* 86% found sponsored video ads that appear to be content misleading.

The survey also found that a large majority of people who have seen Twitter Promoted Tweets in the past 12 months said they hurt or had no impact on their perception of the brand advertised. Some 72% said the same thing about Facebook’s Sponsored Stories. And 85% found sponsored video ads didn’t leave them with warm feelings. “While anyone pushing the native ad agenda or otherwise would agree that we need to provide user experiences that are not jarring or disruptive, we also need to ensure that we are direct and honest with our consumers about when they are being marketed to,” MediaBrix CEO Ari Brandt said. “Some formats achieve this better than others.”

Mind some caveats about this research. For one, it doesn’t compare native ads to banner ads, so there’s no telling whether trust in banner ads is any better than these native ads. Also, what people say they feel about ads and brands may have little to do with the ads’ effectiveness. And MediaBrix has a dog in this hunt, since it offers its own kinds of ad formats for social and mobile apps.

Still, it’s a splash of cold water on a trend that some very high-profile companies are counting on to become the next Google. And it’s a lesson that marketers apparently constantly need to be reminded about: Don’t try to fool your customers, because it can destroy trust in your brand.

Why Do Obama Supporters Appear In Facebook Ads As Romney Fans?

From my Forbes.com blog The New Persuaders:

Recently, I’ve been seeing a Sponsored Story ad on Facebook pages indicating that several friends “like” Republican presidential candidate Mitt Romney. No surprise there. Sponsored Stories are those personalized ads the social network allows advertisers to run that show friends have “liked” a brand, and they’re increasingly common as Facebook doubles down on social advertising.

But what on Earth was the name of a friend, who I know is a vocal Obama supporter, doing on a Romney ad? The answer raises questions about how effective, or at least how accurate, these ads are–not necessarily due to a particular fault by Facebook but thanks to the byzantine rules and privacy features that have developed over years of user outrage and resulting Facebook accommodations.

Anyway, I asked my friend if he knew he was shilling for Romney. His response:

“Lol…..I liked him so I could see his FB feed. You should read my comments.” [Hint: They're not complimentary.]

To be clear, you can see Romney’s posts on his page without “liking” him, but to see them in your own news feed, you need to “like” him. And once you do, like it or not, you become potential fodder for an ad that will appear to your friends.

Another friend of a friend who’s an Obama supporter also was surprised to see his name on a Romney ad. He told his friend:

“I never liked his page. I commented on one of their crazy lies.. gave them a serious piece of my mind ya know!!!!! All kinds of people have been telling me why do u like Mitt???? I’m pissed!!!” …

Read the complete post at The New Persuaders.

Did The Bubble In Facebook Ad Startups Just Pop?

A little crowded, perhaps? (Source: LUMA Partners)

From my Forbes.com blog The New Persuaders:

For much of this year, hundreds of little and not-so-little startups that help businesses run advertisements on Facebook have been playing the M&A game, buying rivals or related companies, getting acquired by bigger firms, or both. But the acquisitions were sometimes for big bucks, fueling a sense that the opportunities were huge for social marketing startups.

It’s not hard to find social marketing firms still thriving, but suddenly it’s looking a little more like a game of musical chairs. And while it would be easy (and wrong) to say the music has stopped, it’s becoming clear that a chunk of those firms will find themselves without a seat as the social media biz starts to mature and its growth chart no longer looks like a straight line up and to the right.

The recent struggles of Facebook and other social media firms such as Zynga aren’t new, of course. They prompted some folks to wonder if the social media bubble had popped a couple of months ago. But it appears now that advertiser uncertainty about social media is starting to hit the still-crowded ecosystem of social media marketing and ad firms.

Today, Salesforce.com laid off about 100 people from two social-media acquisitions, Radian6 and Buddy Media. Although it may not be surprising given likely job overlaps–and the fact that Buddy was losing big bucks before the sale–the layoff suggests that the market for social ads isn’t big enough to accommodate all the players that have sprung up in recent years, or at least all the employees working for them.

Read the complete post at The New Persuaders.

Facebook: Yes, Our Ads Work, Chapter 16

From my Forbes.com blog The New Persuaders:

Facebook has spent much of the past year furiously trying to persuade skeptical brand marketers that ads on its service work. In particular, it wants brands with large fan bases on Facebook not to assume that–like General Motors apparently did when it pulled its Facebook ads just before the No. 1 social network’s May IPO–they can simply post stuff to their Facebook pages and call it a day.

Its latest salvo: A new report conducted with market researcher comScore that tries to quantify the impact of paid ads vs. “organic” brand page content.

Some highlights from the report, which includes case studies of Samsung Mobile and two unnamed “major” brands, a retailer and a financial services firm:

• Leading brands on Facebook can use paid media to extend their total brand reach beyond the reach they achieve using organic media alone. Among a selection of 100 top brand pages on Facebook, those using paid media reach an audience that is on average 5.3 times larger than organic audience alone, and 5.4 times greater than the total audience of top brand pages using no paid media with a similarly sized fan base. …

Read all the details at The New Persuaders.

LIVE: Facebook Shares Soar As Q3 Ad Revenue Growth Accelerates

DAVOS-KLOSTERS/SWITZERLAND, 30JAN09 - Mark Zuc...

Facebook CEO Mark Zuckerberg (Photo: Wikipedia)

From my Forbes.com blog The New Persuaders:

After a rocky several months following its May IPO, Facebook finally provided some good news today as it reported third-quarter financial results that outpaced Wall Street expectations.

The key number: 36%. That’s the rate at which advertising revenues grew. And it’s noticeably higher than ad sales growth in the second quarter, which had flagged at 28%. Excluding the impact of foreign currency changes, ad sales would have risen 43% in the third quarter.

Mobile revenues, a key metric for a company that until recently had zero mobile ad revenues and offered little of note to its mobile users, were 14% of the total $1.09 billion in ad sales.

The other key number: 9%. That’s how much shares are rising in after-hours trading. Shares of FB rose a little less than 1%, to $19.50, in trading today. That’s still only a little over half of the IPO price.

* Update: Make that 20%+. After sleeping on it, investors like the results even better the next morning.

Facebook still faces many challenges, such as the need to provide a better mobile experience for users and advertisers. And thanks to rising expenses, including stock compensation and related costs–up 64% from a year ago–it’s actually losing money on a GAAP basis. But if advertising is returning, whether it’s from more interest in its social and mobile ads, in the Facebook ad exchange that’s getting a lot of attention, or even in the new Gifts e-commerce service, that’s good news.

We’ll hear more from CEO Mark Zuckerberg shortly when Facebook conducts its analyst earnings call at 2 p.m. Pacific. I’ll blog the highlights here, but you can also listen to the livestream.

The call begins. Zuckerberg will talk about the vision and strategy of the company–make the world more connected, etc. Three pillars to the strategy:

1) Build the best mobile product. This is the most misunderstood pillar. Mobile allows us to reach way more people, people spend more time on mobile devices, and monetization should be even better than on the desktop.

2) Improve the Facebook platform.

3) Strong monetization engine. On mobile, ads will be more like TV–more integrated into the core product experience, rather than on the side. We’re starting to see better ad products for people and better results for advertisers.

I want to dispose of this notion that we can’t make money on mobile. Until recently, Facebook didn’t even try. …

Read the rest of Zuckerberg’s comments and his Q&A with analysts at The New Persuaders.

Live: LinkedIn Revamps Profile in New Product Push

From my Forbes.com blog The New Persuaders:

As Forbes observed in a cover story earlier this year, LinkedIn has become something of the anti-Facebook–except that following an uninspiring Facebook IPO, that term is now meant as a compliment instead of a dismissal. Only nominally a social network in the conventional sense of the term, LinkedIn has grown from a company that seemed hopelessly mired in a business niche into a profitable powerhouse that is now indispensable to both recruiters and the rest of us who want to get recruited for a better job.

Today starting a little after 10 a.m. Pacific, it’s holding an event at its Mountain View headquarters offering the press a chance to “meet the new LinkedIn.” Long seen as a fairly static site, LinkedIn earlier this year promised it would be gearing up product innovation. That’s what we’re likely to hear about today. On the agenda are CEO Jeff Weiner; Deep Nishar, senior VP of products and user experience; product manager Aaron Bronzan; Ryan Roslansky, head of content products; product manager Caroline Gaffney; and Joff Redfern, head of mobile products.

I’ll be blogging the highlights here, so keep refreshing for the latest. You can also watch the livestream.

And we’re underway. … OK, now to the news! Mainly, it’s a new LinkedIn Profile. Bronzan says it’s streamlining profile editing, with new tools to connect with your professional network. Top of the page is simpler, with a more prominent photo. Also at the top: a more, yes, Facebook-like (and Twitter-like) section to update your activities instantly. It’s also easier to add new products, skills, etc. on the profile.

There are also more visual indications of your connections. You can zero in on companies, groups, and locations that you have in common with another person with a quick look at his or her profile. Essentially, it’s easier to find common ground more quickly.

To sum up: simplified editing, easier ways to build relationships, and richer insights. This will roll out to all users starting today. You can sign up for an early look here.

Tom White of Macquarie Securities issued a note to investors affirming his “outperform” rating based on the potential for the new profile to spur more user engagement and thus LinkedIn’s value to its core recruiter customers:

We found LNKD’s newly streamlined profile editing tools as perhaps the most interesting take-away from today’s announcement. These new tools aim to make it easier for members to add content and otherwise enrich their overall profile by streamlining how members add data such as skills, certifications, language proficiencies, industry specialties etc. to their profile. By contributing more content to their profile and otherwise ensuring that it is fresh/accurate, a member can improve his/her chance of being “found” on LinkedIn for a potentially interesting professional opportunity. We don’t believe that the average LinkedIn user fully appreciates this dynamic of the platform, and, if LNKD can encourage its members to spend more time updating their profiles, it could drive incremental user engagement on the site (as well as provide more value for LNKD’s recruiter customers). …

Read the complete post at The New Persuaders.

Facebook’s Mobile App Install Ads Get Moving

From my Forbes.com blog The New Persuaders:

Exhortations to install apps are likely a significant chunk of Facebook’s advertising revenues, and now they’re poised to become an even bigger factor in the social network’s future. Today, two months after offering app install ads for mobile devices to a select group of app developers and their marketing partners, Facebook opened up the ads to anyone.

These ads appear right in people’s mobile news feeds, providing prime placement for games and other apps in Apple’s App Store for iPhones and iPads and Google’s Play store for Android devices. Not surprisingly, Facebook says in a blog post that mobile app install ads are already working:

In early results, beta partners like Kabam, Fab, TinyCo and Big Fish were able to reach a more relevant audience and efficiently drive installs. For example, TinyCo saw 50% higher CTRs and significantly higher conversion rates compared to their current mobile channels, as well as a significant increase in player engagement.

A select subset of Preferred Marketing Developers (PMDs) has been testing mobile app install ads and saw similarly positive results. For example, Nanigans’ clients efficiently achieved 8-10x the reach compared to other mobile ad buys. Ad Parlor saw consistent CTR’s from news feed of 1-2% from engaged users looking for iPhone and Android games that their friends were playing.

No doubt those numbers will come down as the novelty factor in any new ad or feature wears off. Still, even a fraction of those results would still be valuable to advertisers.

That’s assuming–and this is a fair assumption given Facebook’s wariness about ad overload–that the company doesn’t go over the top and overload people’s mobile news feeds with the ads. Avoiding overload is especially important for these ads because unlike many of Facebook’s marquee ads, they don’t have a social component, meaning they appear strictly in response to developers paying for them, not because a friend liked an app.

Too many of these ads that don’t have the appeal of a friend’s connection, and the dreaded banner blindness is likely to set in.

There also more coming to improve these ads, according to Facebook engineer Vijaye Raji:

In coming months, we’ll continue to make updates that improve the user experience and the performance of mobile app install ads. For example, you may be able to customize your ad unit based on your audience, ensure that your ads are only shown to people who have not installed your app on iOS or Android devices, and allow people to start installing your app without leaving Facebook.

Congrats, Facebook, You’ve Hit 1 Billion Users. Now What?

From my Forbes.com blog The New Persuaders:

So 1 billion people now visit Facebook at least once a month, according to CEO Mark Zuckerberg, who celebrated with that weird new ad. That’s an amazing milestone for a company only eight years old, fully justifying the glut of press coverage this morning. But is it getting too big for its own good?

I’m not just talking about the usual stuff a company faces as it grows very large–antitrust concerns, privacy worries, hiring quality, and the like. Google, Microsoft, IBM, and many others have faced and still face these issues. But such challenges haven’t taken any of them down. And even as they start (or continue) to be concerns for Facebook, they likely won’t sink it either.

The biggest concern I have is whether Facebook could–as a direct result of getting what seems likely to be just about everyone online to use it eventually–lose what’s special about it. After all, is it enough simply to be the biggest social network? Does being the biggest, as Zuckerberg and many others inside and outside the company implicitly assume, automatically make it the best?

I’m not so sure. And that’s without even falling back on the old look-what-happened-to-MySpace argument. The fact is that Facebook doesn’t do a lot of the social activities people participate in online as well as others. Twitter is way better in many ways for disseminating news. LinkedIn still does professional networking far better. No one has made video sharing easier than YouTube (yes, it’s a social service too). Pinterest, Reddit, and others are seeing massive growth thanks to a pretty clear focus on doing one thing well.

And Facebook? As well as it facilitates connections with friends, its overriding appeal is not any particular features. (OK, except for sharing photos–but even there, it felt the need to spend a billion bucks to buy Instagram.) Facebook’s key advantage now is largely that all your friends are on Facebook too.

Of course, that’s a huge technical and business feat for Facebook–nothing to be minimized, as evidenced by the fact that no one else accomplished it. But is that enough to catapult it to the next level?

Maybe. But as its growth slows, I wonder if essentially becoming a social utility that Zuckerberg long said Facebook should be is distinctive enough a mission to maintain its momentum. One random item that gave me pause today came in passing on a BusinessInsider post on Facebook’s recent move to allow advertisers to “retarget” its users with ads:

The most valuable inventory for re-targeting until now has been Yahoo Mail, because:

  • It has huge scale.
  • It’s engaging enough that you’d only want to click on an ad to leave if you really wanted to leave.
  • The people who use it tend to leave it open as a tab in their browser all day.

In all three ways, Facebook.com is very similar to Yahoo Mail.

Yikes. Facebook is now like a boring email service? Now, it’s probably unfair to extrapolate this comparison in a particular realm of advertising to Facebook overall. But it reflects the reality that Facebook’s ubiquity is inexorably steering it toward becoming something like the new television. Another mass medium, even if it’s a uniquely interactive mass medium.

I guess there’s nothing wrong with that, and in fact there’s a lot right with it, for Facebook’s business. I just can’t shake a nagging feeling that achieving this ubiquity–as Zuckerberg put it today, to “connect the rest of the world”–isn’t enough of a raison d’etre.

So the question now is what Facebook will do with that ubiquity. Maybe simply facilitating those connections is enough. But at this milestone moment the company itself chose to highlight, it’s worth posing some existential questions to go along with that existential ad:

Why is Facebook here?

Is sheer ubiquity sufficient for Facebook to achieve Zuckerberg’s lofty goals?

As Facebook becomes a service for everyone, does it become special to no one?

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