What Facebook’s New ‘Engagement Advertising’ Means to Brands

[Posted by Jeremiah Owyang]

Facebook’s new ‘Engagement Ads’ require marketers to think interactive
Facebook launched a new product called ‘Engagement Advertisements’ that encourages members to interact with the ads by leaving comments, sharing virtual gifts, or becoming fans. To combat dismal click through rates of traditional advertisements, these features emulate widgets and encourage users to increase member adoption, viral growth, and brand interaction.  Brands will only succeed with these "WidgetAds" if they create content that puts community first, lean on new interactions, integrate with other tools, plan for the long haul, and change how they measure success –traditional internet advertising tactics won’t apply.

Facebook, a Fast Growing Global Social Network

Facebook, noted as the largest social network, is on a growth rate to increase it’s active users to 90million active users today in August, 2008 up from 54 million aprox at the start of the year.  While presumed to be of a younger college educated demographic, it’s not the domain of the young alone as the largest growth rates are educated white collar workers, over age 25. Facebook has global growth in markets such as  66% growth rate in EMEA, and 35% and 33% growth rates in Europe and Latin America, respectively.

Engagement Advertisements Integrate with Natural User Behaviors

Facebook’s innovative way of monetizing is unique, they were the first to launch a developer platform (F8) as well as the ill-fated Facebook Beacon, and are now launching with a new interactive marketing and advertising product.

Unlike Beacon or Facebook Connect, both products intended to aggregate the actions on third-party sites (like Blockbuster.com) this new product called "Engagement Advertisements" is intended to nicely integrate with Facebook’s newly redesign profile and news pages. 

Early brands to trial this include: Paramount Pictures whose video commenting for Tropic Thunder ran two weeks ago –I’ve asked for campaign results.  Future early adopters also include General Mills’ Betty Crocker which will have image commenting and the ability to ‘fan’, and video commenting for Addias, both to trial late August.

Engagement Ads provide three unique experiences

Rather than clicking on the ad and being whisked away to a branded microsite, these ads allow members to stay within the contained walls of Facebook and their social community. Engagement ads come in three major flavors:

1) Comment Style Ad: Members can now leave comments on these advertisements, much like wall posts.  Brands that are focused on entertainment, new product rollouts, autos and apparel are well suited. The ad can show up to 4 comments per object, and the activity spreads to the users newsfeed.

2) Virtual Gifts Style Ad: Brands can now create virtual items that users can share, spread to each other. This wildly popular behavior within applications and Facebook is suitable for consumer products, entertainment, and some media.

3) Fan Style Ad: A play off the Facebook pages, users with a persona affinity for a product (like Apple) can become a fan, triggering a notification to their network, and could then tie on social ads.  Will work great for established brands, like guitar hero, passion products, luxury products, or any brand with a rabid customer base.

Forrester Data: Social Networks foster communication, self-expression

With horrible click through rates (I’ve heard cases of .04 percent CTR) of ads on social networks, some brands prefer to focus resources elsewhere.  Why the low rates?  Our research indicates that youth primarily exhibit behaviors of communication and self-expression –not searching for products, looking at ads, or hunting for information.   

Common Behaviors of Youth on Social Networks

See what my friends are up to: 86%
Sent a message to someone: 79%

Posted/updated my profile:  70%

Looked at profiles of people I didn’t know: 65%
Sources:
North American Technographics Retail And Marketing Online Youth Survey, Q4 2007, Forrester Research

This youth data supports that social network behavior is in fact, ‘social’ and these respondents are not seeking to find out about product information, nor learn about the latest products at a media site, product review, or a search engine like Google. 

Knowing that the use case between social networks and product-focused sites is key for marketers to deploy successful marketing.  For success, marketers and advertisers need to focus in on the key social behaviors, and integrate the marketing activities within the community.

Demystifying Facebook’s Marketing Tool Chest

Facebook’s marketing toolset is confusing, and many brands frequently ask me what is the current set, and how do they use it, here’s the current toolset as of today. Remember that when it comes to groups and brand engagement, the most powerful activity is for employees to actually participate in the community with their customers –not stand by the idle wayside. With that said, here are some of the other tools available to marketers to engage the Facebook community.

Engagement Ads: (new, and detailed above) allow community members to interact with the ads in the profile and newsfeeds –without leaving the Facebook site, increasing interaction, social spread, and brand engagement. Currently unproven, brands may not be ready for these types of new ads, until they change how they measure success.

Standard Advertisements: These Text and image ads can appear on homepage or profile pages, neatly integrate with the new redesign.

Social ads: Are helpful for brands to increase the velocity or acceleration by marketers, allowing them to buy ads that echo the behaviors "what did my friends do" of opt-in users. These primarily appear on the newsfeed, which will encourage spread to an individuals network.  Some brands have been under fire from users who felt this was invasive. 

Traditional IAB graphic ads: Advertising laden brands may still purchase the standard IAB skyscraper and banner ads from Microsoft both an investor and partner.  With low CTRs, some brands have better places to spend their money for return on investment.

Facebook pages: Launched last year, brands can (at no charge) create their own pages, embed applications, encourage discussions, and start to garner "Fans" of it’s products.  Most brands are incorrectly using these, based upon the findings from my recent report on the best and worst of social network marketing for 2008 -Forrester Research. 

Event Feature:  based pages allow marketers to promote events through viral invites, rsvp tools, and event rollups from media and community interaction.  While a useful utility, for most brands that market on the web, this is often a side-effort, not the primary push.

Facebook Connect: Perhaps the biggest untold story is the day when Facebook (and other social networks) will connect with corporate websites, I’ve outline future scenarios in this post What ‘Facebook Connect’ Means for Corporate Websites.

Applications: Facebook was afirst mover to allow third-party developers to create an entire eco-system of applications that are growing their own applications.  Most brands are harassing successful apps through sponsorships, cross branding, and a few are building their own apps, see how Dell was able to let the community create –and spread– ads on their behalf.  Also read my posts on Widget strategies to learn more, or my overview of Facebook’s F8 Developers Community.

Key Takeaways

Monetization of social networks continues to be a challenge, and Facebook continues to innovate, however for this announcement, brands and Facebook should:

To Succeed, Brands Must Learn Social Marketing

While costly, risky, and foreign to brands, the biggest missed opportunity for brands in social networks is to become part of the community, interact and build real relationships. Although we should expect interaction rates and viral spread to increase with engagement ads, brands should wait and see how these ads CTR perform.  For those brands that are ready to forgo the risk, and pursue ‘Engagement Ads’ they should:

Community themed: Ads created by the brand will succeed if the content is first focused on the needs of the community.

Rely on new interaction activities: The rules of the game have changed, the goal is to increase interaction within the community –not pull them offsite.

Approach with an Integrated Mix: Facebook offers many tools, ‘Engagement Ads’ shouldn’t go it alone, instead increase chances of success by involving other tools.

Change how they measure success: Brands must also change they way the measure success with these interactive ads, rather than weigh success solely on page views or referral traffic.

Marriage of Widgets and Advertisements offshoot: "WidgetAds"
Looking forward, this announcement helps to set in place how online marketing will start to evolve.  Widgets have already become advertising units, and now these advertisements are starting to become widgets.  Expect Engagement ads, and Widgets created by third parties to start to exhibit these behaviors outside of Facebook.  Facebook Connect, Google Connect, and OpenID will bridge social graphs with interactive ads –springing forth a new generation of widgetads.

Although Innovative, Facebook must focus on marketers
Although pushing interactive marketing, Facebook must hand-hold many brands with their frequently changing marketing offerings. Facebook must develop a client solution that will help optimize these tools with professional services based on data, results, and demographic information.  Marketers can’t afford to experiment with their brand without the help of a trained and experienced group of social marketers provided by the platform.

The only caveat being that the experience of users, always, always comes first, I’ll point to others that cover this aspect.

This is cross-posted on the Web Strategy blog