• by Mark Walsh  @markfwal, August 22, 2008

In what it calls the latest "evolution" of its ad model, Facebook is testing a new set of ads aimed at boosting click-throughs and further tapping into the social graph on behalf of marketers.

The first three types of Engagement Ads now in trial let users post comments, become a "fan" of a brand's Facebook Page and send virtual gifts. Within the units, people can also read friends' comments, and see who else is a brand fan or who shared virtual items.

All three flavors of Engagement Ads will appear in the new home page placement alongside the News Feed on the right. They will also show up in members' News Feeds as people interact with the ads.

The new Engagement Ads build on Facebook's Social Ads, which typically appear in the News Feed and allow marketers to run ads tied to users' actions within the network. This includes actions that people take on branded applications running in Facebook.

Within Social Ads, Facebook is also rolling out a new program that would allow marketers to pay to expand the number of friends who learn about a user's interaction with an application. Currently, Facebook uses an algorithm to figure out who among a user's friends would be most interested in learning about a given activity.

Under the new plan, marketers would have the option of sending a sponsored notification (marked as such) to all of a members' friends. So if someone used a Fandango app to buy tickets to see "Pineapple Express," Fandango and Sony Pictures could pay to tell all of their friends on Facebook about it.

The social network triggered a privacy backlash last year when it launched its Beacon ad program, which notified members about their friends' e-commerce activity outside Facebook. The company revised Beacon to require members' opt-in consent, but the program was the subject of a class action filed only last week.

In a briefing Thursday on the new ad initiatives, Tim Kendall, Facebook's director of monetization, said the new Social Ads program would avoid the same privacy problems as Beacon because it only relates to users' activities within Facebook.

Even so, Facebook is capping the paid notifications sent to friends at one per day to avoid alienating users with an influx of ads they have no interest in.

While the Engagement Ads are expected to formally launch later this year, Facebook has already run a campaign for "Tropic Thunder" allowing users to comment on the film's trailer. Starting in late August, General Mills' Betty Crocker brand will test an image ad with comments and the ability to become a "fan," while Adidas will run a comment ad with video.

Over the next 10 weeks, 30 long-standing Facebook advertisers on the social network are expected to trial Engagement Ads, which will eventually expand beyond the initial three flavors.

With ads on social networks drawing abysmally low click-through rates, Facebook is counting on the new ad offerings to spark increased viral activity and brand interaction. But much still depends on how marketers use them.

"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," wrote Jeremiah Owyang, a senior analyst At Forrester Research, in a post Thursday on his blog about the Engagement Ads.

In regard to the different types, he described comment ads as well-suited to entertainment, auto and apparel brands, "fan" ads for established brands like "Guitar Hero," and virtual gifts "for consumer products, entertainment, and some media."

Freddy Laker, director of digital strategy for interactive agency Sapient, acknowledged that some marketers might balk at having potentially negative comments posted within their ads. That's the risk of "conversational" marketing.

"It's not for the faint of heart, but it's exactly what we're telling our clients you need to embrace in the social Web," he said. "They're going to make these comments somewhere, so why not just encourage them to build these conversations around your ad?"

Facebook's latest ad push comes on the heels of a recent site redesign aimed at reducing clutter and providing users with a simpler, more streamlined experience. Despite the moves, eMarketer earlier this year downgraded its revenue forecast for Facebook to $265 million from $305 million because of the weakening economy and inherent difficulties in advertising on social networks.