Facebook Replaces Google as Feared Disruptor of Online Advertising
The chieftains of online advertising -- Yahoo, Google, WPP -- are convening in Miami, but the talk is about the company not taking the stage: Facebook.
Last week, eMarketer released its online-display outlook for 2012, in which it predicted that Facebook would grab the largest share of the market for the second straight year. Yet when the Interactive Advertising Bureau's Annual Leadership Meeting kicked off Sunday in Miami Beach, Facebook was absent from the list of speakers.
IAB President-CEO Randall Rothenberg said the reason is simple: Though Facebook is an IAB member with a board seat, a company executive spoke at the last conference, and the IAB tries to rotate the companies from which it pulls its presenters.
Still, it was difficult to get through a conversation in the first day and a half of the conference without hearing strong opinions on a giant that is making a bet -- one that may not align with the IAB's view -- on what effective digital marketing looks and feels like in the 21st century.
Onstage, a quip from true Facebook believer AKQA Tom Bedecarre: "If Facebook can overthrow dictatorships, it certainly can mess with a media plan."
From the head of a large media agency, skepticism that users would react positively to brands' showing up more often in their news feeds, as seems to be Facebook's plan: "What will that mean for the user experience?"
From Jennifer Creegan, Microsoft's general manager of display advertising: "I don't consider Facebook a direct competitor. They don't really do display."
And a straightforward business assessment from Frank Addante, founder and CEO of the Rubicon Project: "Facebook has the scale but needs the technology stack."
This has happened before. Google was once the feared disruptor of online advertising. It's now Facebook, and a contingent of IAB companies would love to see the current approach fail.
On Wednesday, Facebook is expected to unveil new premium advertising products. In doing so, it will further distance itself from the kind of ads that proliferate outside of its moated empire and the kind that the IAB is trying to standardize with the ad-unit portfolio it unveiled Sunday as part of its push to increase brand-ad spending.
"It's highly likely that , just as it happened in television and radio, some set of standards will adhere across digital environments to enable the kind of simple scaled buy marketers are seeking," Mr. Rothenberg said. While he won't guarantee it, he and the IAB are obviously betting that its units will be the go-to standard. In his view, a critical piece of boosting advertising spending online is providing marketers with a way to cut through complexity. The implication is that Facebook, playing by its own rules with its own products, adds to the complexity.
But Facebook is not alone in that , and Mr. Rothenberg is quick to say that he isn't singling it. He points to Apple, which has struggled to build a mobile-ad business built on proprietary iAd units. The company has cut minimum spends to $100,000 from $1 million since the iAd launch.
"Can there be some places that persist in having pure custom [ad units]? Absolutely," Mr. Rothenberg said. "But the more the standard comes into play, the more difficult it is to sustain custom as the center of a business model."
Mr. Rothenberg anticipates the follow-up question before it's out of the interviewer's mouth.
"Will [Facebook] move into adopting some of the IAB units?" Mr. Rothenberg asked. He then answers the question himself: "They'll move if the big marketers want that ."
He then offered a hypothetical example in which Coca-Cola wants to run a campaign to reach 50 million users across the top 20 most-visited websites. His point was that a campaign like that can run efficiently only with standardized units. "If [Coca-Cola] can't do that , they'll move on and include the 21st site," Mr. Rothenberg said.