Facebook to unveil new ad offerings

Messages from brands such as Walmart and Starbucks may soon be mixed in with your Facebook status updates and baby photos from friends and family.

Facebook unveiled new advertising opportunities Wednesday to help the world's biggest brands spread their message on the world's largest online social network.

Facebook executives outlined a long-term vision to move from advertisements to stories. Brands you've endorsed by hitting the "like" button will now be able to push deals and other updates right into the news feeds that show your friends' updates, photos and links.

These posts could also show up if one of your friends has interacted with a brand.

The changes come ahead of Facebook's initial public offering of stock, expected this spring. The IPO could value the company at as much as $100 billion. That means Facebook has to prove it can bring in real advertising revenue from the likes of Wal-Mart and Procter & Gamble.

"Facebook is making serious money from ads right now, but they are not making serious money from major brand advertisers. That's where the ad money is," said Rebecca Lieb, an analyst with the Altimeter Group.

This could now change as Facebook moves to integrate brands' messages into its 845 million users' pages.

Facebook made the announcement at the American Museum of Natural History in New York in a rare East Coast appearance.

Rather than bombarding people with flashy ads, Facebook is urging companies to integrate themselves into what people are already doing on the site - talking to their friends and family, commenting on photos or posting news links.

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. Over time, Web-savvy users have grown to used to ads and many are tuning them out.

Those ads are not going away, but brands will now be able to push updates right into the news feeds. Facebook's challenge will be to keep these ads as unobtrusive as possible so that users are not alienated or driven to "unlike" brands.

The company will collect feedback and test out how its users respond to the changes. It will also roll out the changes slowly. At first, users may see just one message from a brand inside their news feed, or even less. And they won't see messages from random companies they are not connected to in some way - directly or through a friend.

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.

Facebook did not talk about its upcoming initial public offering or financial updates because it is in a federally mandated quiet period.

Hide Comments

READER COMMENTS

Loading comments...
Hide Comments