Has Facebook simply created the next generation of the walled garden, with a promise that everything you need is inside Facebook?
A long, long time ago, we used to talk about "walled gardens." America Online (in the 1990's, the company was more frequently referred to by its full name, rather than its initials, AOL) was always seen as the ultimate walled garden. Due to a few lags in the development of client-side technology, not everyone was able to get to all of the web in the same way. The people who had direct access to the Internet, through a service provider, would be able to visit any site they wanted to. Those who got to the Internet via the online service AOL could only visit a subset of those sites - the ones that the engineers at AOL had made specifically available. It didn't matter a whole lot, since there wasn't a ton to see on the web at that time (compared to today, that is). Besides, AOL promised that it had the best stuff in there. The sites and the information that matter were inside of its walls, so you probably don't even want to go outside.
Of course, that stance quickly became the service's undoing. The web was expanding at an extremely rapid rate. A friend would tell you about an amazing new site, but you couldn't get to it because AOL hadn't gotten it within its garden yet. People yearned for more and quickly got over those walls, never to look back.
Right? Maybe not. I think we may be on the verge of seeing the second coming of the walled garden.
Facebook's New Search Ad Units
This week, Facebook officially announced the launch of its new ad units. These ads will appear in the search results. As people type a search into the masthead, the autocomplete box will drop down, revealing a sponsored link. I suppose in many ways this is an inevitable ad unit. There's no way that Facebook (especially Facebook as a public company that must demonstrate that it's actively trying to generate revenue) would ignore search ads. The last decade of Internet advertising has been fueled by search ads. Facebook has search; it must have ads.
But fundamentally, the kind of search that people do on Facebook is different from the kind of search that people do on Google and (critically) the kinds of results that people get on Google. On Google, people not only search for specific things, like particular companies or musicians or places; they also search for categories of things. They also search for ways to do things.
That means that while people may search for "American Airlines," they also search for "airlines" or, most valuably, "flights from SFO to ORD." No one has ever searched Facebook for "SFO to ORD" (unless that's the name of some teeny bopper band that I haven't heard of). Here's where we start to hit up against the key question presented by Facebook's new search ads: why would you buy them?
There is an obvious reason to buy search ads on Google or Bing or any other search engine. People are expressing wants and needs. They are making requests as the first step toward making a decision or a transaction. That's why a click on a search ad is so valuable: we know that the purchase process has begun.
Facebook's search ads can only send people to a page or an app within Facebook (you can, of course, provide links to external sites in the regular Facebook ad units, over on the right side of the page). When someone does a search on Facebook for a brand, they are definitely on a path, but probably one that they could complete without an ad.
You can, however, buy ads against a competitor. That's a smart idea on Facebook's part, because it means that every brand name at the very least needs to have an ad to be competitive. If you are American Airlines, you don't want Delta's page to appear at the top of a search box when your customers are looking for you.
That answers the revenue question for Facebook. Google fought the brand battle long ago when it won the right to make brand keywords open to competitive bids. If only American Airlines can bid on "American Airlines" then the cost of that ad stays at its lowest point. If anyone can, it reaches its maximum. Brands will need to buy their own keywords on Facebook as a blocking mechanism.
But is that it? Has Facebook simply created the next generation of the walled garden, with a promise that everything you need is inside Facebook and brands need to be there because if they aren't they will get screwed by their competitors? If so, then Mark Zuckerberg's supposed dislike of the advertising industry must be true. He has thrown us into a miserable situation.
Some Suggestions, Humbly Offered
I don't really think that is the case. In fact, I'm going to believe that the new search ads actually do provide some new value and abilities for brands on Facebook. I do think that this is a bit of a new method of doing search advertising, and I'm excited to explore it. But I do hope that a few things happen:
Actions inside ads. This is simple. Since the ads appear in a drop-down menu, let me enable a click there, especially a "like" button or a button to claim an offer. If someone can take an action inside the ad, without leaving the flow of the search they're doing, this starts to make sense.
Give me a banner. I understand that Facebook doesn't want people to leave Facebook, especially when they're doing a search. How about if I can just put a small banner in that ad space? It doesn't even have to be clickable. It could just be a graphic that says "Drink Coca-Cola." Give me the chance to have a simple branding impression, maybe even regardless of the search.
Build something that people will search for. Facebook should invest in creating destination pages. If it's going to be at least a semi-walled garden, then it needs to create a few category level pages that people will go to as a way to find information or solve problems. If there was a space where all the airlines were housed, called Facebook Flight Center, then people may start doing searches that demonstrate that they're on a path to a purchase, and that is valuable traffic.
Whatever the case may be, I remain optimistic about Facebook's ability to create a friendly atmosphere for advertisers (and not just because I bought some of its stock at $40). Facebook is the most successful community gathering space created in all of human history. That is amazing and undeniably true. As advertisers, we're bound to find a way to get this to work for us.
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Gary Stein is SVP, strategy and planning in iCrossing's San Francisco office. He has been working in marketing for more than a decade. Gary lives in San Francisco with his family. Follow him on Twitter: @garyst3in. The opinions expressed in Gary's columns are his alone.
Hong Kong, May 5-6, 2015
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