News Column

Facebook Embarks on Ad Evolution

March 1, 2012

Scott Martin


Facebook wants friends on Madison Avenue.

At a splashy New York City event, the social-networking giant pitched "Premium on Facebook" as a new way for advertisers to pay to mingle ads across the pages and mobile phones of Facebook members.

"It is going through a massive evolution starting today," said Mike Hoefflinger, Facebook's director of global business marketing, speaking at the American Museum of Natural History.

Facebook advertisers will now be able to distribute ads to fans of companies in news feeds, the right-hand column and in a log-out message. These ad forms -- what Facebook calls "compelling stories" -- will also hit the news feed on its mobile app.

To non-fans, the ads will only be targeted to the right-side column. Facebook had previously begun allowing brands to advertise to their fans' news feeds.

Along with Premium, Facebook also launched new pages for businesses that include Timeline features.

Facebook's advertising push comes as growth in advertising sales is slowing. The company, which is preparing to go public this spring and raise $5 billion in its initial public offering, will be under increased scrutiny from Wall Street.

"The stakes get a little higher as they move toward their IPO," says eMarketer analyst Debra Williamson.

Facebook's worldwide ad sales grew 104% in 2011 but are expected to climb just 52% to $5.8 billion this year and only 21% to $7 billion next year, according to eMarketer.

Facebook's new ad program is an important step toward catering to ad agency interests, says Rich LeFurgy, a former chairman of the Internet Advertising Bureau. "It's a concrete demonstration that Facebook wants to have a presence with Madison Avenue," he says.

Facebook's mobile advertising has so far been a missed opportunity. More than half of its 850 million members are mobile visitors.

U.S. mobile display advertising could soar from $630 million in 2011 to $5.3 billion in 2016, estimates researcher IDC. Facebook is the only one "that can challenge Google in mobile," says IDC analyst Karsten Weide. "It's going to shake up mobile display (advertising) for a couple years."

Source: Copyright USA TODAY 2012

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