The two paths of Facebook advertising

Facebook is simultaneously pursuing two distinct paths when it comes to advertising.

One is the idealistic drive toward a more social world where people have control over their experiences and companies have to be authentic and engaging to get noticed. The other is a more traditional route where Facebook leverages some unique aspect of its platform but fits it into an existing model known to monetize well.

Along the “social by design” path, businesses pay to promote the conversations and actions of their customers, i.e. Sponsored Stories. They pay to reach more of the people who have indicated they are interested in their business, i.e. Promoted Posts. This fits the way CEO Mark Zuckerberg has talked in the past about Facebook advertising. “The basic idea is that ads should be content. They need to be essentially just organic information that people are producing on the site,” he is quoted as saying in “The Facebook Effect” book. The company is making strides in this area, but not all advertisers believe this approach will work as well or better than the way they’ve done things before Facebook, so the social network still represents a small portion of most ad budgets.

On the second path there’s non-social ads in the feed, the Facebook Exchange and the new mobile ad network test. FBX allows advertisers who track cookies on third-party sites to show remarketing ads to users when they visit Facebook. This takes advantage of Facebook’s reach, but the ads aren’t social in any way. Then there’s the test which lets mobile ad exchanges use Facebook targeting for their mobile banner and interstitial ads. Even though the targeting will be better, these ads will continue to interrupt the user experience of browsing a site or playing a mobile game. These ads don’t include social context either, and because Facebook doesn’t control the ad placements directly, it can’t set standards for what the ads look like. The company has been strict about keeping ads from being too obtrusive on Facebook.com and its own mobile apps, but now it seems to be trying to make money off the poor user experience of third-party destinations.

It’s hard to know how the company reconciles these two paths internally. The second path is hardly objectionable by industry standards — and it might be great for business — but it doesn’t seem as aligned with Facebook’s goal of making the world more open and connected. FBX, for example, uses cookie-based targeting, which Zuckerberg criticized Google and others for in 2011 when he said the method was “less transparent than what’s happening on Facebook.”

At the same time, the company is working to convince businesses to get out of the traditional marketing mindset. “People don’t expect to be talked at anymore. They want to be part of a conversation,” COO Sheryl Sandberg said at the Facebook Marketing Conference earlier this year. “Today we can’t just talk. We need to listen as well.” While there are plenty of ways for businesses to do this through Facebook, the company could also be seen as enabling that conventional broadcast approach through this new mobile ad test and the option for pages and apps to run non-social ads in the feed.

How long will Facebook pursue two paths? Is the second a temporary way to encourage advertisers to give the platform a chance and assure investors that it has a bright future? Perhaps Facebook is being more strategic than ever before, taking small steps toward a bigger vision rather than launching products that users and businesses aren’t ready for.

For example, if the company instead created a mobile ad network that placed Sponsored Stories or other social ads more natively within third-party sites and apps, advertisers used to running banners and interstitials might not immediately see the value. Facebook can’t evolve industry standards until its new products become widely adopted. This more social ad network might also lead users to feel that their privacy was being compromised. Although ads with social context are more relevant, users do not always understand what this means for them: Is their information being sold to advertisers? Who is seeing these ads? Instead, Facebook seems to be taking the safer route by working with existing exchanges and networks to improve the targeting of mobile ads without forcing advertisers and publishers to overhaul their current process and without including cues that might trigger user backlash.

The safer, more incremental route may be smart for Facebook at this stage, but it disproportionately benefits advertisers with the biggest budgets, giving more power to the already powerful. It doesn’t make it easier for small businesses to compete with major brands when features like custom audience targeting are available in Salesforce but not the self-serve ad tool. It doesn’t force businesses to be more accountable to their consumers when they can pay their way into News Feed with Promoted Posts and Page Post Ads. It doesn’t create significantly better user experiences when Facebook data helps deliver flashy ads between every level of an otherwise fun mobile game. In fact, it makes some people wonder if Facebook is putting profits ahead of mission.

Of course, anyone following the company over the years knows just how quickly it launches new products and kills or overhauls existing ones. What Facebook advertising looks like today is probably only a small piece of what it will look like in a few years. It will probably have its own ad network, a better search experience that also includes Sponsored Results, a commerce platform, real-time location-based mobile ads, more immersive and interactive ads, even TV ads.

Perhaps the two paths of Facebook advertising are actually headed for the same destination. The first one might be directly uphill against the way brands and agencies have operated for decades, while the other includes switchbacks between traditional and progressively social initiatives. Maybe the company needs both to get all businesses and consumers to the same place.

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