Facebook Faces the Music From Investors

Facebook’s investors got their first chance to take questions and complaints straight to the top yesterday. Barely a year after its disastrous IPO, the time finally came for Facebook’s executives and board of directors to face the music at an annual shareholder’s meeting. The range of questions and comments from stockholders bordered on the ridiculous, such as when their favorite Facebook game would be coming out of beta (an issue the company has no control over), to the more important matter of when the company will regain the value it has failed to achieve since the day of that ill-fated IPO.

“We understand that a lot of people are disappointed in the performance of the stock and we really are too,” says chief executive Mark Zuckerberg. “The real question is what are we going to do about it. We’ve always taken a pretty long-term view of this,” he says, adding that the company expects fluctuations in how the public and Wall Street perceives Facebook’s position in the market.

“We don’t think that we’re going to be the only company in this space, but we want to be the one pushing it forward,” Zuckerberg says. “This isn’t a zero-sum game. The market is expanding quite quickly.”

Facebook’s mission is to make the world more open and connected, he adds. Facebook wants to set itself apart by building great mobile apps, a platform that brings a social element to other apps, and a strong economic engine that can fuel its vision for a long-term business.

While Facebook’s stock price languished over the last year, the company undertook an all-too-familiar transition from desktop to mobile. It hasn’t been easy, but Zuckerberg says the company made a lot of progress on that front, particularly with its entirely rewritten apps for iOS and Android. “More people are coming to mobile apps on any given day than desktop, which was a really big shift for the company,” he says.

Zuckerberg adds that he’s especially excited about what Facebook can do with location and other attributes of mobile that it couldn’t do with desktop. “We’ve started to plant some seeds with products like Home that can really be future versions of how people use Facebook,” he says.

“Home is a product that we were working on for a while, for months. The idea is to create the mobile-first version of Facebook,” adds Zuckerberg. “Home is the first version of Facebook that was really designed from the ground up to be a mobile product.”

He chose to get in front of some of the criticism that’s been lobbed at Home as well. “There was no real way that we were going to get everything right the first time,” he says. “We haven’t really made our big push for it yet…Until we do that, we’re still kind of in tweaking mode.”

Zuckerberg says Home will see more improvements before Facebook begins to encourage about 100 million active users on Android to make the switch. The transition from desktop to mobile has also forced Facebook to rethink its advertising business, he adds.

“One of the big shifts that we’ve had to make is so that the ad formats that we have work on desktop as well as mobile,” he says. “Now, as of last quarter, 30 percent of the revenue of the company comes from mobile ads, up from roughly zero a year ago.”

COO Sheryl Sandberg says Facebook has also made important strides in answering the question of measurement and proving the value of the platform as a marketing vehicle. “We are a social ad spend and we have worked increasingly to help our advertisers increase their return on spend,” she adds.

In other news, Facebook took yet another play out of Twitter’s playbook and announced that it too will be a haven for hashtags. Facebook is making hashtags searchable and clickable to help marketers join and drive conversations about their business. And it will all be organized just as Twitter does it, via the omnipresent hash mark.

Source clickz.com

Facebook Kills Off Redundant Ad Products

MENLO PARK, Calif. – Facebook wants to do for advertisers what it has done for its users since the beginning - simplify the process of sharing, connecting, and engaging with everything and everyone online. For marketers, that means less guesswork in their social advertising campaigns and a stronger focus on business objectives.

Facebook’s ad product team gathered here at Facebook headquarters on Thursday to detail plans for aunified ad structure that will see the demise of redundant ad products - there are currently 27 separate ad products up for bid on the site - and the amplification of marketing objectives that focus on the bottom line. Online and in-store sales, app downloads, promotional offers and brand awareness, and other key marketing objectives will eventually rise to the surface of Facebook’s advertising stack over the next six months.

Numerous Facebook ad products will be killed off in an effort to give marketers a more consistent advertising platform that works across all placements and objectives. The proliferation of ad units on Facebook reflects the evolution the site has gone through as it introduces new features for users, says Fidji Simo, an advertising product manager at Facebook.

“All of the right pieces were there,” she says. “Even though every single product is very good on its own, the whole is less than the sum of its parts. It really should be simpler.”

As Facebook identifies redundancies in its platform, new combined ad units are being designed to meet a greater range of objectives and make it easier for ad managers to set up their campaigns, Simo adds. The ad product team doesn’t have a specific number in mind for how many ad formats will remain after the culling this summer and fall, but Simo says the simplification process is ongoing and that Facebook will continue to iterate its ad portfolio.

“There is really no reason why sponsored stories should be a completely separate product,” she says, for example. The same goes for online sale offers and question-based ads. “We’re trying to really unify all of these ad units,” adds Simo.

Consistency across ad formats will also drastically reduce the number of creative assets required to launch a full campaign across every channel and placement available on the platform, she continues.

Facebook has been “thinking about who we are as an advertising business,” says Brian Boland, director of product marketing at Facebook. “Advertisers at the end of the day, the reason they do marketing, is to drive business outcomes…It’s about improving their business’ bottom line and that’s been our focus.”

As Facebook incrementally built products for each step of the marketing loop, it was solving business objectives for advertisers, but the solutions occurred in silos, says Boland. “All size of advertisers, agencies, [preferred marketing developers] - all will benefit from these changes” that focus on “maximizing business outcomes,” he adds.

Brands will still be able to control which ad units or placements they desire, but by selecting objectives the revamped platform will also indicate the units or placements that perform best for that specific objective, he explains. Once advertisers identify what they’re trying to accomplish and create a message or ad for that goal, Facebook will suggest the right format and then lead them through options for targeting and customization.

“We’re going to help them make better decisions up front,” Boland says. “We continue to give advertisers control…This doesn’t reduce control, it reduces complexity.”

Brands are already experts at finding their audiences, building creative, and measuring performance that can be accurately pinned to results, he says, adding that Facebook wants to make that process easier and more impactful with the power of social. “This is marketing that marketers and advertisers understand,” says Boland.

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Social Signals Steer Volvo’s Entire Marketing Strategy

Does your dog have its own wardrobe? Is your second private island named after your third ex-wife? Or maybe your butler’s butler has a butler? If you answered yes to any of these questions, Volvo isn’t going to try to talk you into buying an S60. Indeed, the carmaker comes right out and says that the “Volvo S60 probably isn’t for you” if you fall into these categories of ultra luxury (click on links to hear for yourself!).

While Volvo is trying to shake things up with a more edgy marketing strategy, the brand is using feedback on social media to gauge when and where it might be taking things a bit too far. Volvo’s social media team has also been holding monthly chats on Twitter to learn more about its customers. Though its most recent Twitter chat focused on the brand’s marketing strategy, specifically asking followers to react and send feedback on a series of early draft content and campaign elements for social, digital, TV and outside of home.

“The work that we’re doing on social is an early indicator of what messages will resonate and what doesn’t resonate,” Volvo’s North America chief marketing officer Tassos Panas tells ClickZ. “It really is a test bed for what we pursue further down the track in digital.”

Social media has become such a guide for Volvo’s other marketing efforts that virtually everything is tested in social before the brand green lights content for television or other heavy media rotation. The latest campaign for the Volvo S60 would not have become a full campaign if not for the reaction on social first, Panas adds.

“We love the response that we’re getting and it’s fun” but it has also helped the brand steer away from potential marketing disasters, he comments.

In one case, Volvo decided to pull back on a plan to make outdoor billboards with a Chihuahua on it after almost half of the 2,000 comments it received were negative. “For us it was just a little too much,” says Panas.

“Some of the pieces we thought people would love, we actually got some negative reactions to that,” he says. “It really did help us fine tune the campaign and adjust it a bit accordingly.”

Volvo has used humor and a “kind of wry humor cheekiness” in the past, so Panas saw this as an opportunity to “turn back the clock and talk about Volvo the brand and what it’s all about.”

“Over the years, Volvo has done advertising that was probably a bit too tactical” by emphasizing savings or Volvo’s stellar safety record, Panas says.

“No doubt we’re a safe vehicle, but it didn’t help us learn more about [consumers’] connection with the brand,” he adds. 

Panas notes, “We are a niche brand in the US with less than 1 percent share in the market so we feel we can be polarizing to relate to the consumers we are targeting.”

Being an outsider in such a competitive market has its marketing advantages. “I think we’ve taken a decision that we’re OK to take risks. We don’t have to please everyone in the marketplace. We’re actually enjoying not doing that,” Panas says, adding that the brand doesn’t have to dilute its messaging to point where its pleasing to everybody.

“Volvo owners are a little less uptight about what people think about them,” he adds. “The people who are Volvo owners… love that humor and find it really funny.”

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Facebook Introduces Verified Badges Four Years After Twitter

Facebook is getting into the verification business, borrowing a feature that Twitter first introduced almost four years ago.

Facebook’s verification badges for pages and profiles will also mimic Twitter by leaving much of the process unknown and internal.

It’s unclear why Facebook is making the move to verify brands and well-known figures with large audiences on the site but it plans to begin the proactive process over the coming days. The company will “automatically verify the largest pages on Facebook that are at the greatest risk of duplication,” a spokeswoman tells ClickZ.

“Verified pages belong to a small group of prominent public figures (celebrities, journalists, government officials, popular brands and businesses) with large audiences,” the site notes in a blog post announcing the news.

fbverification

“I think that it’s an issue for a lot of the luxury brands,” Raina Penchansky, chief strategy officer for Digital Brand Architects, tells ClickZ. “Social and digital is a difficult space for luxury brands,” she says, because luxury brands prefer to maintain an aura of exclusivity by limiting their exposure and access to larger untargeted audiences.

While verified pages and profiles will add some semblance of authenticity, brands aren’t exactly begging for the feature or avoiding Facebook because they don’t have a small blue badge and check mark next to their names throughout the site.

“I’ve never seen any pushback from a brand,” says Penchansky. “It doesn’t feel like something that’s been a huge barrier for entry for our brands.” Still, she says, some brands might be a little uneasy about the arbitrary verification process, particularly since Facebook hasn’t outlined the requirements for verification or the ability to request a profile or page be verified.

The blue check mark identifying verified pages and profiles will appear in timelines, stories, search results, news feed ads and while users hover over the name of a page elsewhere on the site. Brands that don’t automatically receive verification over the coming weeks are being referred to Facebook’s help center where common duplication issues can be resolved.

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Facebook Relies on Mobile for Ad Revenue Gains in Q1

Advertising revenue from mobile devices comprised 30 percent of Facebook’s total ad revenue in the Q1 2013, up from virtually nil one year ago. Monthly active use on mobile devices climbed to 751 million, marking a 54 percent increase from the year-ago period, as Facebook’s total monthly active user base grew to 1.11 billion.

Facebook’s ad products delivered $1.25 billion, or 85 percent, of the $1.46 billion it generated in revenue during the quarter while payments carried the remainder, lifting the company’s net income to $219 million. Total advertising revenue grew 43 percent year-over-year.

Facebook’s CFO David Ebersman says the growth in ad revenue was driven by the strong performance of news feed ads. “Ad impressions were up 39 percent and average price per ad was up 3 percent compared to last year,” he adds.

COO Sheryl Sandberg also highlighted the success of Facebook’s mobile app install ad product. “During the quarter, 3,800 developers used these ads to drive nearly 25 million downloads. Of the top 100 grossing apps from the iOS and Android in the last week of Q1, about 40 percent of them used our mobile app install ads,” she says. “In gaming, travel, e-commerce, and the financial service industry, the early indicators are that our cost per install are highly competitive.”

Indeed, mobile has quickly become the growth engine for Facebook as desktop ad revenue remained flat.

“I think we’re still in the really early days of what we’re doing and that’s particularly true in mobile,” Ebersman adds. “We have an ad format that works on mobile and we have identity so that we can put the right ads in front of the right people…The big opportunity that’s right in front of us is trying to make the mobile advertising products higher quality and more relevant over time.”

Facebook’s custom audience tool is also gaining traction with more than twice as many marketers using the feature from the previous quarter, including brands such as Hotels.com, Intuit, and Virgin America.

“Facebook is finding some success on mobile because its ad strategy does not focus just on big brands. A focus on big brands is why Apple has failed at mobile advertising,” notes Krishna Subramanian, CMO of Velti, a mobile marketing and ad technology provider.

“Mobile installs are absolutely through the roof. These installs have made Facebook one of the biggest mobile ad suppliers in the world and are really what’s driving mobile revenue,” Subramanian adds. “Cross-platform targeting remains the single biggest prize for Facebook’s mobile revenue. Facebook’s precise user profiles, combined with targeting users across devices and off Facebook, will be an absolute gold mine when they figure it out.”

Facebook’s costs are also skyrocketing as it maneuvers to increase the frequency with which users visit the site, the length of those visits, and the overall number of users it reaches on a daily or monthly basis. Overall, the company’s costs jumped 60 percent year-over-year to $1.08 billion.

Wall Street’s immediate reaction to Facebook’s latest quarter was relatively calm. Company stock remained flat in after-hours trading as Facebook narrowly beat the market’s expectations for the quarter.

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Facebook Fuses Disparate Data for Deeper Targeting

Facebook is combining what it knows about its users’ behavior and activities on Facebook and off, with the help of data brokers like Acxiom, Datalogix and Epsilon. Brands can now target users based on their activity outside of Facebook, across desktop and mobile channels, and offline entirely. With this latest change to its arsenal of ad products, Facebook is trying to gain more pull with large advertisers in particular, as it pieces together more actionable data such as shopping patterns, email lists and loyalty programs on its users.

Marketers can now go to Facebook to place ads in front of users based on more signals and a deeper compilation of data mined from more sources. Paul Marcum, director of global digital marketing and programming at GE, is already thinking about how he’d like to use the new ad targeting parameters for the benefit of his brands.

“We have a number of different audiences that are relevant for us, of course with GE,” he tells ClickZ. “Certainly we seek to engage business decision makers and have perhaps more commercially oriented conversations, but we also seek to engage people who are enthusiastic about technology like we are. However those connections can be made off of Facebook, on Facebook, we’re excited to make those connections. Their ability to surface and find people who share our same interests is a great opportunity for us.”

He is confident that Facebook is riding the wave toward more granular ad targeting, taking cues from the industry at large. “Online marketers of all stripes have embraced programmatic buying in recent years as the technology has increasingly become more sophisticated and obviously the data pulled together has become available,” says Marcum.

“That ability to target is of course something that has been part of the opportunity on Facebook from the earliest days. I think it’s natural that they combine what they’re able to do within the platform with what marketers are able to do outside of the platform,” he adds. “It makes a lot of sense and will be seen as fairly appealing for those who have been doing audience buying so far.”

Facebook has created more than 500 unique groups of users based on data from its partners thus far. A consumer-packaged goods marketer can, for example, target heavy buyers of children’s cereal from data provided to Facebook by Datalogix that “includes loyalty card and transaction-level household purchase data with multi-channel coverage across all product categories.”

In clarifying its adherence to privacy standards, Facebook acknowledges that many companies are already using this type of data for targeting off of Facebook. “No personal information is shared between Facebook, third parties or advertisers. Partner categories work the same way all targeting on Facebook works. The advertiser only knows the size of the audience and can’t access any information about individuals included in a category,” the company notes in a blog post.

“This is completely anonymous. I think privacy has been taken well into account by Facebook,” says Rebecca Lieb, an analyst at Altimeter Group.

“The data is going to be pretty rich and robust, that is the heart of Facebook’s advertising offering. It’s state of the art, precise customer targeting data,” she says. “I don’t think they’ve cracked new codes. They are, however, making a valuable tool more broadly available.”

When asked if Facebook is nearing the deep end in terms of how granular it can get with data for ad targeting purposes, GE’s Marcum responded with optimism and wonder. “I would never bet against the future of data,” he says. “I think that there’s opportunities out there that I’m sure we haven’t even contemplated yet and ways that we can be more relevant and further the comfort and the conversation, and the ongoing relationship between brands and their audiences.”

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Marketers React to Facebook Home With Mixed Doubts and Expectations

What Facebook wants and needs more than anything is time. And in today’s world, there is nothing more influential or time-sucking than the technology kept by our side 24/7 in our pursed or pocketed smartphones. With Home, Facebook could immediately increase the amount of time its mobile users spend on its network by almost tenfold.

In the realm of mobile and social media, the phrase “out of sight, out of mind” carries tremendous impact. Facebook Chief Executive Mark Zuckerberg highlighted this divergence and huge potential during the unveiling of Home, noting that the average mobile user checks her Facebook app up to 12 times a day while the average mobile user checks her device’s home screen at least 100 times a day.

ClickZ spoke with a pair of marketers and a mobile phone analyst who readily see what Facebook is after with a more immersive, always-connected-to-Facebook experience, but none of them think Facebook has done enough with Home to disrupt and make gains in the smartphone space as it has in social networking.

“This isn’t as scary as it could have been for some of the players…in terms of what this actually does versus what a true Facebook phone could have been,” says Avi Greengart, research director of consumer devices at Current Analysis.

“I like the fact that they are not building a phone…Facebook doesn’t need a phone,” he tells ClickZ. “Companies that have tried social-oriented phones, including HTC and Microsoft, have failed and failed hard.”

Greengart believes Facebook Home will primarily appeal to socially centric users who want more from Facebook, not less. “They didn’t just build an app. They built a product launcher that sort of takes over your whole phone and gives you Facebook first,” he says, but “it does take over your phone and that’s a lot for even someone who loves Facebook.”

Cameron Yuill, founder and chief executive of mobile marketing agency AdGent Digital, also has doubts about the success of Facebook Home. “Maybe I’m not the demographic that really cares that much about making it such an important part of my life where it’s on the home screen,” he says, but nonetheless, “there certainly are people who want to spend their whole life on Facebook.”

Adam Kleinberg, chief executive of digital agency Traction, was hoping for more from Facebook. “It feels like a lack of vision…like something that they’ve rushed to market,” he says. “Just having a new home screen falls short of having a new operating system, and my hope was for an evolution, not an incremental step,” he adds. “It’s all about this one screen that gives you access rather than reinventing what a mobile phone should be, and I think Facebook is in a position to do that,” Kleinberg says.

Facebook Home doesn’t appear to have any immediate impact on advertising, but Kleinberg and Yuill already have a good idea of how Facebook plans to make money off its colossal efforts on mobile.

“I think what typically will happen is for a while it’ll be content that you’ll see on your screen, and that’ll be great. Then because of the inevitable pressure of making revenue, you’ll see ads,” says Yuill.

“There no reason why they wouldn’t start taking over that real estate as well,” he says. “It’s a no-brainer from an advertisers’ point of view…and I think it’s going to be welcome. But that doesn’t matter at the end of the day, because the consumer gets run over whenever there’s a buck to be made.”

Kleinberg says, “It’s probably premature for them to introduce ads on a new thing,” but he believes Graph Search is a “big indicator of where they see their future potential” on mobile and beyond.

“I think the biggest opportunity for them will be location,” says Yuill. “Location becomes a huge factor in putting ads in front of you, and because it’s your home screen you can do it then and there.”

Source clickz.com

Facebook Reveals ‘Home,’ its New Mobile Digs on Android

The Facebook phone has arrived, or will arrive on April 12, giving the social network giant a new window into its users’ mobile habits and a more consistent, always-on connection for members of the Facebook community.

“Today we’re finally going to talk about that Facebook phone or more accurately we’re going to talk about how you can turn your Android phone into a great social device,” says Facebook chief executive Mark Zuckerberg at today’s widely-anticipated unveiling.

“We’re not building a phone and we’re not building an operating system, but we’re also building something that’s a whole lot deeper than an app,” he adds.

Facebook Home, an app and series of core services integrated into select Android devices, will be preloaded on the HTC First, a new smartphone that AT&T will sell exclusively for $100 on contract. The new mobile software, or family of integrated apps, will initially only be available for download in the US on a select number of Android-powered smartphones from HTC and Samsung, but Facebook plans to expand its reach with Home over the coming months.

“We don’t want to build some kind of phone or operating system that only some people are going to use,” Zuckerberg explains. ”A great phone may sell 10 or 20 million units at best… Even if we built a really good phone, we’d only be serving one or two percent of our community.”

He describes Home as a “family of apps” that can be installed to take over the home- and lock-screen of users’ phones. And why would Facebook want to be on users’ home and lock screens? The average mobile Facebook user checks their Facebook app up to 12 times a day, but the average mobile user checks their device’s home screen 100 times a day.

“What we aspired to do with Home is provide a lot more value in that moment,” says Adam Mosseri, director of product at Facebook.

“I think it’s pretty safe to imagine that if you choose to have this Home experience, then you’re going to be in better contact with your friends” on Facebook, Zuckerberg adds.” A lot has been made over time over whether connecting with people online takes us away from connecting with people offline,” Zuckerberg says. But staying connected with people important to us is not frivolous, he says, “It’s a big part of what we do” and “who we are.”

Facebook began reorganizing its business last year to be “mobile first,” and its revamped iOS app was the first step in that direction. Home is the second step, according to Facebook executives at today’s event.

Home relies heavily on basic gestures such as long and short taps, swipes and multi-touch. It includes a new cover feed that appears the moment users turn to their phone, a revamped messaging service that incorporates text and Facebook messages in the form of “chat heads” and an app launcher.

When asked about how Facebook plans to monetize the new product, Zuckerberg said: “There are no ads in this yet. I’m sure at some point there will be.” He also clarified that search will not be exclusive to any one provider, reiterating the open nature of Android, and that data from individual usage will only be used to improve the performance of Home.

Because of Android’s open architecture, Facebook didn’t have to partner with Google on the Home project, but Zuckerberg explains that the process is entirely different with each mobile operating system. “The way you work on all these operating systems is pretty different. Apple is a pretty controlled environment…” and Facebook is in “active dialogue to do more with them, but ultimately anything we do on Apple is going to happen in partnership with them.”

Facebook plans to launch a tablet version of Home “several months” after it launches on Android smartphones and is committed to a monthly update cycle.

“We think this is the best version of Facebook there is,” says Zuckerberg.

Source clickz.com

What Marketers Expect From Facebook’s ‘New Home on Android’

Facebook will try to carve itself a bigger slice of the mobile pie at an event today where it is widely expected to reveal a new mobile ecosystem of sorts forked onto Google’s Android operating system. Well-placed leaks and reports from The Wall Street Journal and The New York Times indicate that the elusive “Facebook Phone” is finally coming - one way or another. Facebook’s invite for the event teases it as such: “Come see our new home on Android.”

Although rumors of a phone in the works have surfaced for years, the device never came to fruition. Now it appears that Facebook is thinking more than device, opting instead to build a platform that could thrive across an array of mobile phones running on Android. Facebook will showcase the features of its new mobile software on a new smartphone from HTC, according to reports, a strategy very similar to how Google got its start on mobile with the G1 from HTC (the first Google-branded smartphone) in October 2008.

Marketing executives tell ClickZ that they expect Facebook to reveal a phone and new mobile software built for Android that puts Facebook front and center throughout much of the mobile experience. Facebook is also expected to wrap many of the phone’s core features directly into its network, beginning with the phone’s home screen. Where, how, and under what conditions the new HTC phone will be sold are not yet known. But even more important will be how Facebook plans to modify Android and springboard this launch into a full platform play that it can claim as its own on mobile.

“If they do want to gain more control, they’re going to have to do so unbelievably subtly and slowly,” says Peter Shankman, chief executive of digital marketing agency Geek Factory and author of the just released book “Nice Companies Finish First.”

This is Facebook’s chance to make a new home for itself on mobile with an immersive platform, he says. “Their biggest problem right now is they just don’t have it. They just don’t have it, end of story…If it’s not an actual platform that works from an advertising perspective, then it’s going to be a miss.”

Adam Kleinberg, chief executive of digital agency Traction, says brands will begin to fit into the equation when Facebook pushes Graph Search and more enhancements to the news feed onto mobile.

“The power of the Android platform is that it’s flexible and you can create your own version of it. Just like there’s flavors of Linux, there’s flavors of Android. And I think that this flavor will be very powerful,” he says. “I think this gives them an opportunity to, if they’re doing an operating system, to integrate the new feed and new advertising opportunities there first.”

Facebook has an exciting opportunity to evolve from an app provider and browser-based experience into a more cohesive operating system, Kleinberg adds. “[Facebook] could really just reinvent a more seamless integrated experience that’s more social forward…Who needs a browser anymore? It’s just going to be Facebook,” he says.

“It seems almost like harkening back to the days of AOL trying to present you with a holistic browsing experience that was kind of separate from the web, but it’s not going to be so much separate, it’s going to be more open and inclusive,” adds Kleinberg. “But still Facebook is trying to do what AOL did back then, which is present you with a holistic experience from search to messaging…to your social conversations…to how you browse.”

He also expects Facebook’s new play on mobile to help solidify its plans for data targeting. “I think we’re going to see more about how their entire data strategy is pulling together with Facebook Exchange and the purchase of Atlas and their partnership with Acxiom,” he says. “It’s a little bit of a diversion from where they said they were going to be pre IPO. I think they’ve become more like a typical ad targeting network…and I think we’re going to see those puzzle pieces more clearly articulated.”

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Facebook Pushes Third-Party Ads Into Users’ News Feeds

Facebook is doubling down on its real-time bidding exchange and bringing third-party ads into users’ news feeds for the first time. With news feeds being the dominant activity on mobile, the move also presumably gets the company one step closer to delivering more ads on its mobile platforms.

The expansion into users’ news feeds, the most prized space in all of Facebook, indicates the company is enthusiastic about the early results of Facebook Exchange less than a year after it launched with ads appearing on the right-hand side of the site. As of last month, FBX had accumulated one billion impressions served according to Adobe.

As the exchange and data-driven ad offerings grew rapidly in the first few months, Facebook was eventually compelled to address privacy concerns after its partnership with data matching firm DataLogix was revealed in the fall. But now that users will see ads targeted to them based on the sites they visit outside of Facebook more upfront and personal in their news feed, fresh criticism will undoubtedly emerge.

“I think that consumers might think that this is slightly stalky. There could be pushback, not because this is something new, but because it’s in a more personal space,” says Rebecca Lieb, an analyst at Altimeter Group. “We’ve all had the experience of looking at a new computer or a new pair of shoes and that product follows us around the web for a while. So that’s not highly unusual, but following us around the web and following us in our news feed…it’s closer to your personal space.”

Although Facebook claims the introduction of retargeted ads in users’ news feeds won’t impact the total number of ads users see in that space, overall perceptions among users will differ because the ads will reflect something they’ve done online presumably recently, adds Lieb.

“The news feed is their golden goose, so they need to be careful in how they tamper with it,” says Doug Schumacher, co-founder of Zuum. But neither he nor Lieb is surprised by Facebook’s latest move in the social advertising space.

“Retargeting is effective, otherwise advertisers wouldn’t do it,” Lieb says.

“Facebook has an enormous amount of data and it can layer that data on top of retargeting data, possibly making it even more valuable,” she adds. “What I think Facebook is doing here, and this is a product primarily aimed at direct marketing or direct marketing initiatives and goals, is trying to garner higher click-through, higher traffic, and hopefully higher conversion on retargeted ads.”

“In addition to revenues, there’s enormous amounts of data to be gathered by going off Facebook,” Schumacher adds. “Further linking users’ Facebook activity to areas outside of Facebook could bring them a lot of behavioral insights as they move into e-commerce…While Facebook is something of a walled garden, it also makes sense they’d try to bridge the gap with the outside world.”

Lieb also pointed to a problem that limits the efficacy and reception of many retargeted ads today, and one that could compound in news feeds because Facebook does not plan to offer FBX ads on a frequency- or time-capped basis, according to Lieb. “We’ve all had the experience where something that we bought six months ago is still being advertised on sites we visit across the web. I think this has been a problem for retargeting in general,” she says. “On Facebook, this fly in the ointment could be magnified by virtue of the fact that these ads are going to appear in a space that’s much more personal and immediate to users than say a third-party publisher site.”

Facebook is working with demand-side platforms TellApart, MediaMath, and Nanigans as it starts to bring more outside ads to news feeds early on, but it plans to make the new format more broadly available to DSPs and advertisers over the coming weeks.

“This is an alpha. Not a beta, not a test,” says Lieb. “So it’s going to be incumbent on advertisers to test and run the analytics on their results and see if this is more effective than the former positioning.”

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