• by David Roth , January 2, 2008

As Facebook opens up, users might shut down

A curtain has been ripped away - and everyone wants a peek. The day Facebook opened its social graph to marketers, unveiling Facebook Ads, it sent a longed-for invitation to view and use its signature high-contrast, ultra-detailed online grid of interlocking social networks.

The density and depth of information in the graph and the fact that Facebook has 50 million subscribers - with new enrollment in the six figures every day - are irresistible to marketers.

Facebook Ads is comprised of two complementary elements: a social advertising component code-named Beacon and Facebook Pages, an initiative that allows brands to become a part of the Facebook network. In the most heralded development, Facebook users who friend a brand's page become influencers for that brand via social ads sent to their friends' Facebook feeds. Facebook Ads also promises advertisers unprecedented demographic and user activity information about each ad's performance.  

"This is neither behavioral nor contextual targeting, it's kind of in between," says Paul Martino, CEO of Aggregate Knowledge. Martino, a co-founder of early social network tribe.net, says Tribe "tried this five years ago, and it didn't work so well." Some problems are as daunting today as they were a few years ago.

"Profiles get out of date," Martino notes. "Stuff hangs around." Outdated preferences or since-regretted purchases emerging, ghostlike, from a browser's past to haunt the present - and be incorporated into social ads. Scarier still is the very real possibility of user backlash against Facebook Ads.

"There's the concern that users will not like the format, and that it clutters up the experience," says Emily Riley, an online marketing analyst at JupiterResearch. Facebook is attempting to minimize that by limiting the number of social ads people are served (two a day is the current max) and keeping things voluntary.

"It's much different than the traditional third-party way of doing things," Riley says. "In this case, users initiate the contact. This is very appealing to advertisers, because it's like automatic word-of-mouth that's still under their control, to a degree." Even after factoring in those problems (and some ongoing regulatory challenges), Facebook's rich store of information isn't going to get any less appealing.

"Marketers are desperate to identify themselves," Riley says, and become part of the conversation at Facebook. They still have one tough question to answer and they hope the answer lies in the social graph: Why would a Facebook user become "friends" with, say, Verizon? "The responsibility is on the advertiser to be interesting," Riley says. "That's a risk for Facebook." Wal-Mart, for instance, has struggled to get comfortable on MySpace, which offers a program similar to Facebook Pages.

Brands that already have built-in communities and strong identities seem best equipped to make good use of the information Facebook is offering. "It's not for every brand," Martino says. "It's not for your unconsidered purchase, your two-dollar bottle of water. It's for the Harley- Davidsons of the world." But low-passion brands that use effective incentives can benefit, too, Riley says. "Give away free ringtones," she says, "and all of a sudden, Verizon has plenty of friends. The key is not to give away too much, and make the incentive something that's relevant."

Whether Facebook Ads manages to make winners of its corporate partners and begin a new era for behavioral marketing remains to be seen. Already, though, it has brought copious buzz to a site that wasn't lacking for it.