Facebook to unveil new ad offerings
Posted: 12:02 pm Wed, February 29, 2012
NEW YORK — New, potentially lucrative advertising opportunities are coming to Facebook as a prelude to its initial public offering of stock. The idea is to lure big brands with the promise of effective, precisely targeted ads that reach the social network’s 845 million users.
Facebook has invited marketers and journalists to an event Wednesday at the American Museum of Natural History in New York. It’s a rare East Coast appearance for the Silicon Valley social-networking company.
Though Facebook hasn’t said exactly what will be discussed, it is widely expected to release new ways to advertise on its website and possibly on mobile devices.
Facebook has a vast trove of information about its users’ lives, hobbies, likes and dislikes, yet the company has kept advertising fairly unobtrusive to date. Ads for teeth-whitening, wineries and laundry detergent and the like are relegated to the right side of users’ Facebook pages.
“Facebook is making serious money from ads right now, but they are not making serious money from major brand advertisers, and that’s where the ad money is,” said Rebecca Lieb, an analyst with the Altimeter Group. “They currently have rather low-rent, shoddy ads on Facebook.”
With an IPO looming, however, there is pressure to prove that Facebook is worth the $75 million to $100 million that will be demanded once it goes public this spring. That’s where the big brands come in. Nestle, Procter & Gamble and other big brands don’t want to be relegated to the sidelines, Lieb said.
Facebook will try to integrate ads into people’s experience, so that friends’ posts about brands are showing up alongside their news links and puppy photos.
“Consumers are really tuning out advertising,” Lieb said.
According to research firm eMarketer, Facebook has a 14 percent share of the $12.4 billion display advertising market in the U.S. last year. This year, it’s expected to grow to 16.8 percent, surpassing Google’s 16.5 percent. In all, eMarketer estimates that Facebook’s advertising revenue will hit $5.06 billion this year, accounting for 83 percent of its total revenue.
To ensure it doesn’t alienate users with sudden new, obtrusive advertisements, the company will likely collect feedback and test out how its users respond to the changes.
“Facebook has certainly backed down on things,” Lieb said. “But they are not just going on what people say. They are going on what they do.”
Other changes from Facebook include Timeline for brands. The company, which is based in Menlo Park, Calif., has been nudging its users to switch over to this new profile format, which emphasizes photos and reveals more prominently posts and updates from a user’s entire Facebook history. Now, brands can create their own Timelines, too. On Wednesday, Walmart’s Timeline was available, beginning with the opening of the first Wal-Mart Discount Center in 1964.
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