Is Facebook's Future in Ads?

This article explores the potential of Facebook's advertising revenue model, analyzing the challenges and opportunities that lie ahead. The author argues that Facebook needs to adopt a more traditional advertising model, similar to Google's, in order to achieve long-term success.

The Limitations of Facebook's Current Advertising Model

The author believes that Facebook's current advertising model, which focuses on social-network specific ads, is not sustainable. This is because ad agencies, who control the purse strings for brand advertising, tend to view social media advertising as experimental and allocate only a small portion of their budget to it. They prefer traditional ad units, such as IAB standard ad sizes and homepage takeovers.

• Facebook Pages
• Social ads
• Sponsored groups
• … and other ad solutions listed here

The Recession's Impact on Experimental Ad Budgets

The author cites a Wall Street Journal article that highlights the impact of the recession on experimental ad budgets. As businesses tighten their belts, they are cutting back on these budgets, favoring more traditional ad formats with proven track records.

What Advertisers Want

The author points out that advertisers are accustomed to buying specific ad units, such as IAB standard sizes and homepage takeovers. They prefer these formats because they offer a high degree of control and predictability. Facebook, however, does not prioritize these ad units because they can be intrusive and annoying to users.

Learning from Google's Experience

The author draws a parallel between Facebook and Google, emphasizing the challenges Google faced in convincing ad agencies to adopt its advertising model. Despite its dominance in search advertising, Google had to work hard to win over agencies and establish itself as a viable platform for brand advertising. It took years of effort and, as the author points out, even involved resorting to "bribing agency folks with candy!"

The Potential Cultural Shift at Facebook

The author predicts that if Facebook adopts a more traditional advertising model, its culture may shift from a technology-driven to a sales-driven one. This could lead to a decline in the influence of engineers and a rise in the importance of ad sales staff.

Signs That Facebook Might Be Prioritizing Ad Revenue

The author provides a checklist of potential actions that could signal Facebook's shift towards prioritizing ad revenue.

Conclusion

The author concludes by noting that it is still too early to say definitively whether Facebook will prioritize ad revenue. However, he believes that if Facebook does embrace a more traditional advertising model, it will face challenges similar to those Google faced. He also suggests that this shift could have significant implications for Facebook's culture and the balance of power within the company.