May 18, 2013

Year after Facebook IPO, ads are where it's at

Much has changed in the past 12 months, including the addition of mobile ads, the launch of a search feature and the unveiling of a branded smartphone.

By BARBARA ORTUTAY The Associated Press

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Mark Zuckerberg
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Facebook founder, Chairman and CEO Mark Zuckerberg, center, rings the opening bell of the Nasdaq stock market a year ago from Menlo Park, Calif.

The Associated Press

Sean Bruich, Facebook's head of measurement platforms and standards, believes the new tools are paying off.

"What we can see conclusively a year after the IPO is that ads on Facebook really do help drive people into the store and help them make purchasing decisions, help influence their purchasing decisions," he said.

A recent Nielsen analysis found that consumers are 55 percent more likely to recall "social ads" than traditional online ads.

So powerful is Facebook's new analytic arsenal that privacy advocates are growing concerned about the potential intrusiveness of merging consumers' online and offline experiences.

People "are getting served ads based on things they didn't put on Facebook and maybe wouldn't be comfortable putting on Facebook," said Rainey Reitman, activism director at the Electronic Frontier Foundation, a nonprofit civil-liberties firm. Facebook says mechanisms are in place to protect privacy.

"We've never had anything like Facebook," Reitman said. "We've never had an entity that was able to collect so much information on so much of the world's population, ever."

Advertisers aren't complaining.

"Anywhere that more than a billion people spend time with their friends each month is extremely valuable to us," said Brad Ruffkess, connection strategist at Coca-Cola.

At Procter and Gamble, the world's biggest advertiser, "we saw almost from the start that social media is the world's largest focus group," said Marc Pritchard, the company's global brand building officer.

Both companies are important advertisers on Facebook and members of the company's client council, a group of more than a dozen brands and ad agencies that have met regularly with Facebook executives since 2011 to talk about advertising and marketing on the site. Other members include Unilever, AT&T, Walmart and GroupM North America, a subsidiary of advertising agency giant WPP.

Still, some advertisers remain skeptical. Ryan Holiday, director of marketing at American Apparel, is critical of Facebook's "sponsored stories." These are messages from marketers that are interwoven into users' news feeds. He said the clothing company spends less than 10 percent of its online advertising budget with Facebook.

One thing is increasingly clear: The future belongs to mobile advertising. And just a year ago, Facebook warned investors it was behind in capturing this market. In response, Facebook retrained engineers and rebuilt its mobile applications, which users complained were clunky. Now, there's an explosion in the number of ads shoehorned in between status updates and cat photos.


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