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Industry Execs Mull Impact of Facebook Ad Network

  |  October 3, 2012   |  Comments

Advertising industry pundits may believe it's inevitable that Facebook will launch an independent ad network, but they aren't exactly cheering about it.

Advertising industry pundits may believe it's inevitable that Facebook will launch an independent ad network, but they aren't exactly cheering about it. A panel assembled to discuss the topic Tuesday at OMMA Global, a conference held in conjunction with Advertising Week in New York, seemed unanimous in its assumption that Facebook would inevitably launch such a network. But they drew a big question mark over the when's and where's - and were surprisingly negative about the potential impact.

For years industry observers have wondered whether Facebook might launch a network in which its ads would be transported to other sites. In June, it emerged that Facebook Sponsored Stories ads were showing up on Zynga's gaming site. Facebook has since taken other steps in that direction, such as a trial of a mobile ad network that began in late September, in which it works with ad exchanges to put selected Facebook ads on iOS and Android devices.

The panelists gathered Tuesday at OMMA Global were convinced that investor pressure on Facebook to come up with new ways to monetize its mountain of data would lead it to launch a full network sooner or later. "When you have such a massive data-driven ad vehicle, with one billion users and the richest set of data out there, it would be hard to believe you would not leverage that capability," said Calvin Lui, president and chief strategy officer of Unified, a cloud-based social operating platform.

But these moves may bring it into tension with the privacy concerns of consumers, some panelists said. Facebook advertisers can already target ads to people segmented by age, location, interests, and even education, although they cannot tie that to an individual. The impact will be much greater if that is then linked to data on other networks.

"Will it manifest itself in a way that won't scare the beegeezus out of consumers?" questioned Lui. That sentiment was echoed by Adam Kmiec, director, global digital marketing and social media at Campbell Soup Company. "What scares me is that we (consumers) are not their customers anymore. Wall Street is." But he said that consumers themselves have remained surprisingly passive on the subject or are simply unaware that their data is being used. "I don't see people marching in Washington (D.C.) to protest this. That means we as an industry need to hold Facebook accountable."

Don Mathis, CEO of ad delivery platform Kinetic Social, was also cautious. "Facebook has to make sure not to violate their social contract with users, who won't be comfortable licensing out their PII (personally identifiable information) across the open Internet." He said Kinetic has trial ballooned such techniques with a few ad agencies and had received an adverse reaction to it. "There is a certain creep factor when the email you sent to Target shows up on Facebook," he noted. Several panelists pointed out that such techniques have long been used in the direct mail business by banks and credit card companies, but that they were simply becoming more transparent to consumers in the digital world.

Other panelists were less concerned about privacy and more about how effective such an ad network would be in a landscape that is rapidly evolving. "Facebook was not engineered to be an ad delivery site and that's why we have those crappy ads on the side," quipped Chase McMichael, president and CEO of InfiniGraph.com, which helps brands draw conclusions from their social data. Although Facebook led the way on newsfeeds, other companies such as LinkedIn have quickly copied them, he noted, questioning the long-term value of the ads Facebook will create in an online advertising world that will become more splintered. Several panelists also questioned whether Facebook might not in the long run decide to go for a subscription model that lets users opt out of ads altogether for, say, an annual fee of $10. That leaves question marks as to the value of the potential ad network.

Kmiec also asserted that Twitter had done a better job as an ad platform than Facebook, proving far more consistent in its policies. Several panelists chimed in that Facebook's frequent changing of its strategies and programs has left advertisers confused at times. "With the frequency of product changes and the time it takes for companies to absorb these changes, it is difficult for brands to make Facebook their trusted, valued partner," said Kmiec.

Panelist Michael Scissons, president of Syncapse, a social media analytics and consulting firm, said that to be successful in its efforts, Facebook will have to redefine what is at the core of its network and what content to distribute across it. There is still a value in the kind of content that brands are being asked to produce for Facebook, such as sponsored streams that force them to create more compelling, engaging content, panelists said.

Cassel Kroll, director of social media strategy at media network Mindshare, who attended the panel, was more positive about the potential of a Facebook ad network. "If you look at the evolution of Facebook's ad units, you see a strong shift towards using paid channels to organically integrate brands into conversations. If they can find an effective way to continue that storytelling & engagement across the web, they'll have a killer product."

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ABOUT THE AUTHOR

Mary Lisbeth  D'Amico

Mary Lisbeth D'Amico is a freelance writer based in Jersey City who frequently covers digital marketing, social media, tech startups, and venture capital. She has contributed to a wide range of publications including The Wall Street Journal, Business Week, Red Herring, and Real Deals. Find her on Twitter at @mldamico.

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