Facebook Ad.0
While he's concerned about how users are reacting to the changes at Facebook, Murphy says the site's early fans are rolling with the punches, even if they don't know it.
When Facebook launched News Feed, a tool marketers can use to slip relevant ads into a user's data stream, the site saw a minor rebellion.
"When we first announced News Feed, we had about 700,000 users come together as 'students against News Feed,'" Murphy explains. "Time Magazine called it the largest college protest since the Vietnam War. But the reality of what happened is that the students wouldn't have been able to come together that way if it hadn't been for News Feed, which they used to spread the word of the protest."
Irony aside, the News Feed backlash, which has since subsided now that users better understand their privacy settings, illustrates the potential value proposition of a Facebook campaign.
According to Murphy, the one-to-one appeal of Facebook can deliver on a mass-scale is what makes the social-networking site tick.
In a campaign with Chase Plus One, the financial institution used Facebook to engage potential customers on issues that mattered most to them.
"Chase wanted to create a relationship with college students," Murphy says. "What they found was that many of our users didn't think they could make use of the bank's rewards points system. The bank used Facebook to educate its customers about the rewards system by letting them share their points for joint-purchases and charitable donations."
But did it work?
While Murphy says the Chase campaign was a huge viral success, pointing out that many similar marketing efforts get higher interaction rates from trusted friend referrals than from items directly inserted into News Feed, questions still linger about the Facebook audience and its receptivity for ads.
Neither MySpace nor Facebook would comment on the record when asked to discuss clickthroughs. In their own way, each said such data was both confidential and campaign-specific and therefore not relevant to anyone beyond those responsible for the campaign. But it is Facebook that has been most savaged in online gossip pages.
In March, Nick Denton called Facebook out in a Valleywag post, saying the plucky upstart was a terrible platform for ads, with a .04 percent clickthrough rate, as compared to .10 percent for MySpace on similar campaigns.
"Media buyers, the agency people who book campaigns, report that the college social network is a truly terrible target," Denton wrote. "They're mainly students, with low disposable income, of course; but, beyond that, the users appear to be too busy leaving messages for each other to show much interest in advertising."
Minus the hard-to-read chart that Denton provided in his post, GigaOM blogger Robert Young made the same observation, reporting that the Madison Avenue scuttlebutt was that campaigns run on Facebook had been big disappointments.
To compound matters, BizReport updated the same rumors of lackluster performance for Facebook campaigns, with a similar story last week.
But Facebook disputes those rumors, saying advertisers have had a lot of success tapping into the site's audience.
"We could target a number of different ways, but we choose not to," Murphy says. "What Facebook does is rely on self-reporting data from its users to serve up relevant ads."
According to Murphy, the authentication process required of Facebook users before they join means that people are who they say they are, which means that the highly relevant ads will only scale as the site continues to grow.
But one doesn't have to take Murphy's word for it when it comes to the Facebook crowd. University of Texas psychologist Samuel D. Gosling told US News & World Report that Facebook users don't deviate much from their online personas. From a marketing perspective, that means Facebook is capable of delivering almost exactly what you see.
If you're marketing Malibu Rum, you should get a good response from users who identify themselves as drinkers. And better still, you should be able to accurately determine if Facebook has a healthy population of drinkers before you launch your campaign. On the other hand, if you're marketing life insurance (a product young people aren't likely to think about), you might be lost in a sea of 50,000 smaller social networks without much of a map.
For now, the vote is still out.
In the meantime, while a growing social scene on Facebook may increase the site's utility for me, and by extension make it a better launching pad for ads, MySpace, with 67 million active members, continues to rule the roost. That's not so much a knock on Facebook as an observation that only now are we beginning to witness the start of a potential tipping point for Facebook. Remember the original query Brad posed to the iMedia staff? Why am I getting so many friend requests from Facebook?
By definition, social networks are egocentric creations. If they don't work for you, they simply don't work. If you ask me about Facebook, I'll tell you I'm still waiting. But in the digital age, that could mean my answer may be here as early as tomorrow morning when I check my email. But if you ask me about MySpace, well… when this story posts, I'll be on a date with a girl I met on, you guessed it: MySpace.
So what does that mean for an ad campaign? If you want to play in the social networking space, it's MySpace for today, perhaps Facebook for tomorrow, and who knows what in the future.
A final word from the lawyers
At press time, Facebook was defending itself against a lawsuit filed by ConnectU, a site Zuckerberg had been associated with while studying at Harvard. In the case, the ConnectU founders have alleged that Zuckerberg stole their idea when he created Facebook. While Facebook insists that the case is without merit, an adverse ruling could shut down the site and/or result in Zuckerberg losing control of the company, according to a report in The International Herald Tribune.
Michael Estrin is associate editor at iMediaConnection. Read full bio.