Facebook’s Choice — Make History, Or Be History

If I were a Facebook advertiser, I’d probably still be holding meetings and sending emails about how to strategize around Facebook’s marketing conference late last month. Rightfully so. There’s a lot to digest.

What’s interesting here isn’t so much what was announced, which was better mobile experience for advertisers, bigger ads and better targeting. What’s interesting is the direction of the announcements: which is that Facebook is listening to advertisers and beginning to deliver what they want.

The cause of this trend is of course the IPO, in a word: earnings. In three words: huge quarterly increases.  The trend it has set in motion is great for advertisers. Let’s put them in perspective and then come back to what Facebook will become.

Mobile

It almost doesn’t matter what the number of mobile users are right now (it’s north of 100 million). It will grow beyond any predictions. The key decision for marketers is how to capitalize on Facebook’s new mobile integration. By integrating the ads into the news feed itself, advertisers can use the Facebook mobile app without huge redesign costs. Very shrewd move, and one that indicates the utility Facebook will build into its cross-screen efforts.

Clearly, the Facebook experience needs to be seamless between mobile and the web. And let’s not forget that more than almost any other company, it is going to need its mobile experience to drive its web experience.  Here, it needs work. Consumers share things on the move, as they happen. If Facebook was on its mobile game, companies like Instagram would never have flourished so easily, because the functionality would have already been built in.

Facebook will capitalize on this experience, which differs from the traditional online “surfing the web” type of activity. Instead, marketers will get instant advertising opportunities, capitalizing on the moment when someone is sharing something — often in the middle or near a purchase decision.

This is very different and very lucrative. Example: snap a picture of something interesting right outside a Starbucks. An ad appears inviting me to come in and get a coffee — $1 off if I become a fan.  Facebook has, to date, done very little to tie location and action together to give an advertiser an instant response opportunity.

Bigger Ads

This announcement was a little obvious, and again, just a trailer for the bigger movie to come. It has been proven time and time again that bigger, more interesting ads, give better results for advertisers (up to a point).  Current Facebook ads, even with the changes, are tiny anomalies in the world of advertising.

The Internet has gone from static banners to rich media to dynamically served and retargetable display ads. For all its innovation, Facebook has noticeably trailed behind, so I’m particularly interested to see the new options for advertisers and what  Chris Cox, VP of Product at Facebook means by “a big fat story-telling canvas.”

Target Your Fans

The new Facebook reach initiative clearly shows a trend toward getting brands to find fans and then target the friends of fans. This is really the “thin end of the wedge.” Facebook is in essence offering a site retargeting within its own inventory.  At some point, Facebook will extend its ability to retarget a wider network. This is where and when things will get interesting.

As Facebook comes under more and more pressure to deliver earnings, they are going to need to do two things that have so far proved to be problematic for them:

1. Reach extension (briefly mentioned above)
2. Analytics

The recently announced Reach Generator is just the start. Advertisers want to tie the reach generator back to the activity on their site.  It’s oh-so-nice to pay for the right audience and reach your fanclub, but when you talk about reach you still have to talk about relevant reach.

Just as brands did with the demand-side platform (DSP) model when it first came on the scene, this needs to be stress-tested. Some tough questions need to be asked about the relevance of the larger audience that the reach generator is generating. Is this audience buying from you?  If so, how much?  And when?

Opening Up The Walls

For real reach, advertisers will need to win the battle of connecting with fans beyond Facebook’s walls. So, until Facebook opens its walled garden up to the Internet, or the storefronts inside the castle moat start producing dollars, advertising growth will continue to be limited. However, as earnings pressure sets in, I’m sure we will see Facebook’s walls begin to come down.

Second, it needs to achieve better analytics. Specifically it needs click and post-click tracking. If I’m running an ad on Facebook, I want to know not only how many impressions I’ve served, but also how many people clicked on the ads, and, of those. who converted.  And, once again, guess what? I want to be able to cross-correlate this to my client list.

The announcements made at the Museum of Natural History were the first step in this direction.  They were made in a safe environment, meaning pre-IPO. Everybody loves you before the IPO. It’s a year down the road when those expectations set in that a company has to be aggressive and even risky. In order to meet expectations, Facebook will step out of its walled garden and join the rest of us in the wild west that is the Internet.  It’s about the money. It always is.