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Has Facebook Lost Faith in Social Ads?

After Once Vowing to Transform Online Advertising, It's Increasingly Embracing Standard Offerings

By Published on . 4

Has Facebook lost faith in the potential of social ads and its mantra of "word-of-mouth marketing at scale"?

The company once publicly eschewed cookie-based ads in favor of its own targeting tools fueled by information that users knowingly provide about themselves. But it's done an about-face in the past six months, with products that depend more on its unparalleled scale than on the workings of its social graph. Most notably, last week it brought its ad exchange, FBX, out of beta and began allowing retargeted ads to appear in its most valuable real estate: users' news feeds.

It's also bought itself an ad server, Atlas, introduced "lookalike" targeting to let brands market to users similar to those in their existing customer bases, and begun partnering with data giants like Acxiom to enable targeting based on offline purchases.

Taken together, these developments may better position Facebook to snag the kind of big global display-ad buys that might otherwise go to the likes of AOL or Yahoo. But it's a major departure from its positioning going into its IPO, when it vowed to transform online advertising with socially-enhanced ad formats like sponsored stories. It also once characterized its native targeting based on user data like age, location and avowed interests as inherently superior to web tracking -- in terms of accuracy as well as privacy.

Social context is now an ingredient in Facebook's marketing recipe instead of being the whole meal. For the past year, ad strategy has been driven by the concept of layering the social network's own interest- and demographic-based targeting with data marketers gather independently, said Gokul Rajaram, Facebook's product-management director for ads and pages.

"Social is one of the foundation elements of Facebook advertising," he said. "We're simply turbocharging and enhancing ways for marketers to reach people."

While Facebook clearly isn't abandoning social ads, its adoption of more tried-and-true online-ad models has the advantage of being more easily explained to CMOs, most of whom never grasped the significance of accruing fans and "likes," according to Colin Sutton, social-media director at OMD.

"Social levers were interesting, but buying against specific audiences and specific audience behavior is much more interesting for brands and marketers, and much more effective at finding the right people at the right time," he said.

Mr. Sutton also observed that Facebook's relatively new "custom audiences" product, which lets brands upload their CRM database to Facebook to target their existing customer bases, has further refined audiences, making the social network's native targeting more useful.

As a public company with tremendous quarterly pressure to deliver revenue, Facebook may have a strategic mandate to chase the easy money that its scale can deliver through a product like FBX. However, it risks distancing itself from its lofty positioning as a place for brands to have relationships with people, which resonated with many marketers, according to Ian Schafer, CEO of Deep Focus.

"It's become less about having a relationship ... and more about reach," he said. "I would hate to see Facebook just end up being a publisher like everyone else is."

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