August 16, 2012
Facebook News Feed Ads – The Potential Impact
Much furore has already been kicked up around the news that Facebook is set to trial the allowance of adverts from any firm (whether you have ‘liked’ them or not) in people’s news feeds. But what does this really mean for Facebook users, Facebook itself and Facebook Advertisers?
As with the roll-out of Facebook Timelines, online forums are awash with Facebook users threatening to close down their accounts and turn their back on the social media channel for good. Meanwhile, others are content to accept the proposed changes as, after all, it has to be expected as Facebook is a free service and its pages are already decorated with ads. With Facebook being integrated so tightly into so many people’s online and offline lives, a mass exodus from Facebook is undoubtedly unlikely, but the level of negative feedback is sure to unsettle the social media giant.
Fragile times for Facebook
For Facebook itself, it is a very difficult situation and one they are approaching very cautiously. With share prices now at half of what they were sold for on the first day of trading (back in May) and with increasing pressure on the company to establish a concrete and long-term strategy for profit, they have no choice but to look for new ways to boost their advertising revenue. As we reported in a blog entitled ‘The Future of Social Media’ in February, a Facebook Strategy and Planning representative stated that Facebook “is going to be a mobile company very shortly”, and this means that Facebook have to effectively provide advertising space on their mobile app. However, the app does not show the sidebars (which is where Facebook ads appear on PCs), and so ads in news feeds are the logical option for them.
For Facebook Advertisers, this move will allow firms to reach out to a vast amount of people via their news feeds, when previously they could only use this method to reach people that already ‘liked’ them. In theory, this placing of the ads will mean that they are much more likely to be seen and engaged with than those in the sidebars, which are easily either consciously or subconsciously ignored. The question will be whether the negativity surrounding this proposed change will deter businesses who do not wish to be connected with advertising that is deemed bothersome.
Realistically, to one extent or another, businesses will use Facebook news feed advertising, users will see them and click on them, and Facebook will profit from them. So, Google+ cannot sit back rubbing their hands together just yet and the current dissenters will no doubt come to live with the changes. But with questions over Facebook’s long-term profitability and seemingly decreasingly user loyalty to the social media channel, this could be a dent in their armour at the same time as protecting their financial future.