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Facebook testing 'Sponsored Results'
Facebook is reportedly testing new advertising options that could make the social network more appealing to direct marketers.
Facebook is reportedly testing “Sponsored Results” as a new form of search ads that will appear in the drop-down box as a user types a search on the social network, according to a TechCrunch report.
These new ads will allow advertisers to target Facebook users searching for specific content – even competitors. The new form of sponsored ad will not appear in the actual search results page, but only in the drop-down box under the search bar. Microsoft currently has a deal with Facebook to place ads on the search results page.
TechCrunch technology journalist Josh Constine says: “The Sponsored Results will look just like organic results in the typeahead search box atop every page, except for being marked with a tiny word 'sponsored'.
“Facebook tells me they'll be sold on a cost-per-click basis, and can be targeted to people searching for any Page, app, Place (and possibly event) without that business' permission,” says Constine, adding that Facebook began the tests on Thursday night.
What makes the new Sponsored Results especially interesting is the fact that they cannot be based on broad keywords, but rather have to be targeted at a specific entity (such as a page, application, brand or place) on Facebook.
Constine notes the new feature could be used for more than just stealing traffic from competitors on Facebook, but could also be used by advertisers to punt special offers, competitions or other associated entities within Facebook that users may miss if only the standard Facebook page shows up as they're typing a search. These Sponsored Results could also be further tailored using Facebook's targeting algorithms, so they are only displayed for specific types of users.
In the run-up to and following its IPO, Facebook's business model has faced intense scrutiny. Forrester analyst Nate Elliot said in a blog post on the subject that, while Facebook has been evolving to serve consumers, it has been very poor at serving marketers.
According to Elliot, Facebook has lurched from one advertising model to the next over the last five years. “One global consumer goods company told us recently that Facebook was getting worse, rather than better, at helping marketers succeed. And companies in industries from consumer electronics to financial services tell us they're no longer sure Facebook is the best place to dedicate their social marketing budgets – a shocking fact given the site's dominance among users.”
However, a new advertising option, such as Sponsored Results, could help improve marketers' ability to actually reach Facebook's 900 million users – and to pick up the social network's game against search giant Google.
Ahead of Facebook's IPO, Wordstream published an analysis of the site's performance compared to that of search giant Google. While Facebook does not publish its average click-through rate (CTR), independent analysis of more than 11 000 Facebook campaigns showed the social network has a CTR of about 0.051%.
According to the statistics, this is almost 10 times lower than that of Google's display ad network, which has a rating of 0.4%. The report notes that, depending on targeting options, Google's CTR can be up to 36 times higher.
It has been noted that Facebook's targeted ads that appear in the sidebar can be easily ignored by users. The Sponsored Results would, however, target users, as they are already in the process of actively looking for something.
Facebook has also recently been testing “Facebook Exchange”, which will see users being shown ads based on their browsing history. The ads will appear in the ad-sidebar and will be based on a real-time bidding system, allowing brands to retarget Facebook users who are known to have visited their sites. Users will reportedly be able to opt out via third-party platforms, but will not be given the option to opt out completely on Facebook itself.
The social network will reportedly be monitoring feedback during testing of its new advertising options very closely, before actually implementing them.
Amid the speculation around the effectiveness of advertising on Facebook, MD of World Wide Worx Arthur Goldstuck previously said: “Facebook has only begun to explore advertising models. It is generating serious revenue, and will probably find ways to boost that revenue substantially in the coming years. Of course, Zuckerberg's ego could always act as a brake on the company's progress, but chances are that he also wants to see the business boom.”
ITweb [ ] 2012-07-20