A self-service auction for performance-based campaigns is aimed at small business advertisers, but may provoke spending from a broader set.
Since their debut in March 2006, Facebook's homegrown Flyer ads have offered the easiest way for marketers to reach users of the hyped social network. The site has thousands of Flyers live on any given day, according to a spokesperson, yet the self-service ads have often performed poorly on traditional digital advertising metrics, according to anecdotal reports shared with ClickZ and others posted on the Web.
In a change meant to appease click-through hungry advertisers, Facebook has begun offering an auction-based, cost-per-click ad model for the Flyer placements. Called Flyers Pro, the new performance-driven ad platform lets advertisers name the price they're willing to pay for each click while targeting ads on a range of factors that were previously unavailable.
The CPM-based Flyer ads will continue to be offered by default, but from now on will be called Flyers Basic. Whereas Flyers Basic targeting capabilities include gender, age and specific college and regional networks, Flyers Pro options promise all of the above plus a range of keyword data included in user profiles. For instance, marketers can deliver messages based on a person's political affiliation, relationship status, or personal affinities such as favorite music, books or movies.
"We added the CPC pricing option to give more flexibility to advertisers and to better serve those running Flyers in order to get users to take an action, like visiting a Facebook event page or another Web site," the spokesperson told ClickZ.
In Facebook's ad arsenal, Flyer ads represent one leg of a three-legged stool that also includes IAB-standards banner ads brokered by Microsoft and a sponsorship product sold directly by Facebook's sales force.
Facebook says Flyer ads have historically found favor with small businesses and individuals placing user-to-user ads to promote groups or events. While the company said its new features were created with similar goals in mind, the quick feedback mechanism provided by its CPC system may help drive experimentation and broaden the advertiser base somewhat. If that happens, budgets and average CPC rates should rise.
"It starts to expose really what is the [advertiser] interest in Facebook," said Chad Stoller, executive director of emerging platforms for digital agency Organic. If the bidding process is competitive, he said, that proves it's a viable advertising platform. If bidding is tepid, marketers may smell opportunity and make an investment.
Either way, introducing a transparent self-service auction will likely spur use -- at least initially.
"I’d rather spend my money on standard ads on Facebook using a CPC auction-based platform than on low-CPM inventory," said Ian Schafer, CEO and founder of integrated agency Deep Focus. "I actually think this is the solution for marketers who just want to show ads on the site, of which there are many. It’s no way to build a brand, but it is a way to have a presence."
Even if the ads don't perform, he said, "at least you don’t pay for ads not clicked upon, as you would with a CPM-based network."
If that sounds like a case of damning social network advertising with faint praise, there's a reason. To Schafer and other ad execs, running ads alone misses much of the real promise of these sites: community building and CRM.
"It’s kind of like bunting with two outs and a man on second base," he said. "You’re stepping up to the plate, but not implementing the right strategy, nor putting yourself in a position to win."
Yet Schafer and others agree creating an auction system for cost-per-click ads will certainly please Facebook's conversion-minded advertisers, and will likely generate new interest from advertisers that haven't used the system before.
"It's likely to be tested by us relatively quickly," said Derek Leedy, VP, account director with online media agency Mediasmith, "Anywhere that has a Google type of interface, it's always easy to test for efficacy at small levels."
The promise of personalized ads based on social network profiles has long titillated marketers while generating relatively few jitters over the potential privacy ramifications. Whatever concerns, they haven't stopped Facebook rival MySpace from introducing such targeting in recent months.
Even so, the value of delivering profile-targeted ads to social network users is still debatable. And comparing Facebook's monetization dreams to Google's silver bullet, as some have done, is a stretch.
"With targeting, it technically makes sense," said Schafer. "But the real problem is that when people visit a social network, they intend to stay within that network, as opposed to Google, where people are using the service as a launch pad to deeper information off the site they are currently on."
He added, "That may be the fundamental reason why display ads on social nets don’t click -- people don’t want to leave."
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Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects.
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