A little over a month ago, Facebook launched their updated "Flyers Pro" system that added per click bidding, and better ad targeting to their self-serve ad service. Today, Valleywag posted an analysis concluding that the Flyers Pro "system poses a direct threat to Google's AdWords and Microsoft's AdCenter." In their comments and on other blogs, people questioned Valleywag's conclusion, arguing that Google has nothing to fear because their ads are targeted based on searches -- for which the searchers already have the intent to find something.
Facebook Flyers Pro ads, on the other hand, are targeted by country, age, sex, keywords, relationship status, education, or workplace. "Google ads are part and parcel of Google SERPs!," writes Donna Bogatin this morning. "Facebook Flyers are part and parcel of Facebook 'social graph' [sic] ... In the simplest terms, Facebook Flyers 'target people' in their hghly [sic] personal space while Google AdWords fulfill people’s needs in their anonymous information space."
Bogatin seems to be forgetting, though, that Google's AdSense program -- which targets ads on third-party sites by keywords found in content, not searches -- accounted for 34% of the company's revenue last quarter, or $1.45 billion. It could be argued that Facebook's Flyers Pro is very similar to Google's AdSense program -- but with more precise targeting tools (and existing only on one site).
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A couple of weeks ago, Charlene Li ran an experiment demonstrating a very respectable 2.76% response rate (that's response, not click-thru) on her $5, untargeted Facebook Flyer buy. Granted, Li's flyer wasn't selling anything and a response cost only time, but with proper targeting and ad design, it seems entirely possible that advertisers might find success using Facebook's internal ad network.
Bogatin asserts that ads targeted too closely to your interests on Facebook are likely to be deemed "creepy." Maybe so, but are they any more creepy than ads targeted to the search you did for a medical condition? Or the ads Google's Gmail runs based on your email contents? Probably not -- if people are creeped out now, the feeling probably won't last. The concept of a robot reading what we say and do and delivering ads is not a foreign one to Internet users.
So are Facebook Flyer Pro ads a Google killer? In general, no, but on Facebook, possibly. Valleywag is right to guess that Facebook "wants to gain more control over its U.S. [ad] inventory." Facebook's expansion of their internal ad network shows that the company wants to go it alone rather than use a third-party to sell its ad space (it already has a display advertising deal in place with Microsoft). With better campaign management tools, they probably could have success with small advertisers the way Google has with AdWords and AdSense.
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