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

Update: Only a few brands will trial these new ads, after testing, will then be broadly released later in the year.

A few days ago, I had a private briefing before the press with Tim Kendall, Director of Monetization at Facebook, below are the findings, with specific recommendations for brands. As I get more information, such as results and data, I’ll update this post.

Web Strategy Summary (90 Words)
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’s ‘Engagement Advertisements’ emulates natural activities of members –in hopes to increase interaction, network spread, and brand preference]

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.

[Facebook’s ‘Engagement Advertisements’ more akin to interactive marketing with a social twist: “WidgetAds”]

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.

[Brands will only succeed with ‘Engagement Advertising’ if they lean on user behaviors like communication, self-expression, and social exploration –traditional internet advertising need not apply]

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:

  • Be 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.

    Related Resources

  • This is cross-posted on Forrester’s Interactive Marketing blog
  • See all posts tagged Social Networks, Widgets, Facebook, or my weekly digest
  • Forrester Report: The Best and Worst of Social Network Marketing for 2008
  • Forrester Report: Online Community Best Practices
  • Forrester Report: Online Communities: Build Or Join?
  • Forrester Report: Google’s OpenSocial: Good News For Marketing Widgets But No Silver Bullet
  • Forrester Report: Get With It With Widgets
  • As usual, the conversation spirals off into Friendfeed.

    Update: Forrester clients can access a short brief with additional recommendations for interactive marketers.

    99 Replies to “What Facebook’s New ‘Engagement Advertising’ Means to Brands”

    1. Facebook still selling ads. They should think more about switching off advertings and start user communication enhancement helping companies connect with their community (fans, interested customers, or people sharing same points of interest). They’ve the ability to help the business find relevant Internet “advertising” standards like Google did with Adsense instead of those crappy IAB formats.

      Would be great to have a video interview of Tim Kendall about how they brainstormed to come to that conclusion about Facebook monetization.

    2. Jeremiah,

      As you are aware, I’m sure, there are precious few marketing agencies that have a clue about Facebook, let alone “engagement marketing”. Most think an online campaign is banner ads, and that they should score extra points for knowing about geo-targeting or some other segmentation strategy for tighter accuracy. Bah!

      Facebook has largely played it safe so far, so this is good news. The Social Ads are a great idea and can work really well, so if this is the next development out of that… awesome. But it seems to me this is going to stay bleeding-edge stuff for quite a while to come.

      With engagement comes a whole new kind of risk many don’t want to think about, let along experiment with.

      But I love it! Bring it on.

      Now where the heck is Facebook Connect?!


    3. Hey Jeremiah;

      Where are you getting this data from?
      To combat dismal click through rates of traditional advertisements…

      How do we know the CTRs on Facebook are “dismal”?

      I know that the CTRs are 10% of what we’re seeing elsewhere, I know that Google is suffering to make ads work on SNS. But that’s not really a good comparison.

      Google is a search-oriented advertising platform, they’re not designed for this space. SNS (like Facebook) tend to generate a ton of pageviews that are not in any particular vertical. My CTR is obviously going to be higher if I advertise financial products on a personal finance blog. Comparing these numbers to Facebook CTRs and then calling Facebook CTRs dismal is hardly apples-to-apples.

      I mean, what’s the CTR of Radio? of TV? Facebook bears far more resemblance to Radio and TV than to traditional web sites.

      Your “demystification of the tool chest” is excellent, but I think there may be a few extra players to add (from your F8 link).

      You missed the two biggest game developers: Zynga and Social Gaming Network. You also failed to mention the largest provider of application advertising on Facebook (& other SNS): Cubics serves way more ads than Social Media or Rock You. They’re also doing display for big brands in the UK, Australia and the US.

      If you’d like more info, you have my e-mail from this comment.

      And don’t get me wrong, we’d love to see better CTRs, but the real targets are Quality and Engagement. I strongly encourage advertisers to use things like Facebook Pages and custom widgets, but at some point display is a key part of the “awareness strategy”.

    4. the most exciting aspect of this isn’t even about selling a product or service…its the ultimate in A/B testing (what works and why straight from the horses mouth!). Hopefully another baby step towards advertisements that suck less.

    5. c’mon fb! this what your monetization director came up with? look. you guys need to look beyond things being behavioral and engagement. this is your chance upend advertising. you’re not thinking hard enough.

      fb cannot become ‘the social web’. continuing to try only makes things worse. already, the site is too noisy and polluted.

      my advise. you need to really (really) re-think your strategy. completely
      (hint) re-tool and re-purpose what fb is about.

      did i mention you need to re-think your strategy?

    6. Jeremiah, I just found this post on FriendFeed… 😉 An incredibly timely piece for me since I am pitching a Facebook ad campaign to a client next week. This post will help them *deal* with the dismal CTRs @ FB. Any advertiser on social media sites like FB need to commit to the long-term regarding advertising. Yes, that’s hard to do. But FB @ least is giving us tools *beyond* the old flyer ads. Thanx, as always!

    7. Hmmm…I am curious to see which brands will be bold enough to dive into the deep end of the pool and opt for the Comment Style Ad, and question whether brands that really don’t understand the SNS will ever relinquish control in order to truly allow consumers to engage with their brand.

    8. This is a huge step in the right direction for Facebook and I look forward to seeing how brands (and their agencies) utilize these new options to the fullest.

      As someone who runs an agency and does a lot of work with brands and emerging technologies I can’t wait to give this a try with some of my clients.

      Thanks for sharing!

    9. social web > fb

      fb’s strategy is based on dominance. dominating the social web. this (obv) is a losing battle.

      fb is running to the middle in an effort to make a land grab. this may seem very alluring (>$15billion), but the (social media platform) strategy is NOW wrong. this strategy worked before (but that was before the web was erm *ahem* social). in fact, fb should not be even thinking in terms of a platform. platform strategies are obsolete. the internet is the platform (which is rapidly becoming socialized)

      re-tool: focus instead, on how fb can build community equity that is transferable from the online world to the offline world. secondly, the value life cycle does not just end w/ ad consumption – this is the problem that advertising has in its current form.

      re-purpose: ID and…co-specialize assets based on this. the verticals here (truly) can have a revolutionary impact in the offline world. fb won’t need a monetization director b/c the business logic will be lightweight and obv (gushing w/ cash). fb connect hints at this direction, but again it’s based on dominance (strategies like this don’t work anymore). when it comes to fb connect – think about strategic control points and how you can disrupt others (the answers not obv) and goes beyond what fb has done before) – it’s time to stop being “philosophically aligned”

      apols if this doesn’t make sense and if it sounds like a rant.

      my $0.02

    10. I think the struggle here for them will be that the ads are still ads, which, by nature, are a one way communication. They’re unnatural as a (two-way) community thing. Sure, you can comment on them or move them around a little, but they are ill-suited to be conversational. It’s changing a little, but in a wildly diverse conversation like Facebook, ads will always be wallpaper. Other, more focused communities have less a problem with that (no data to support that thought), but the problem still exists. The ads are often either interruptive or irrelevant to the conversation.

      You note how few brands are using the Facebook pages effectively, and I think you’re pointing to this as the bigger/better opportunity for brands. I totally agree with that, since a “brand community” is the chance to engage in conversation and build relationships. Hey, even some pretty bland brands have 10,000 fans. They should have an ongoing conversation. That would be more engaging than commentable ads.
      Then you’ve just gotta make those communities available like clouds.
      Great post. Chock full of info and provocative thought.

    11. Jeremiah, you really do the web a service with your analysis. This is spot-on, and I’ll be referring people here. Keep up the great work. -Fred

    12. Nice idea, you´re saying it at the end of your post:
      “Facebook must develop a client solution that will help optimize these tools with professional services based on data, results, and demographic information.”

      I think Facebook should consider new smart technologies like Predictive Targeting to adress Product Interest without using the data of the users.

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

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