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How Facebook is reinventing digital advertising

How Facebook is reinventing digital advertising Rebecca Lieb

The rise of digital content marketing is making it clear to forward-thinking marketers that thinking (and strategy) need to shift in order to find balance between an advertising/media buying model and newer paradigms in which marketers become publishers, creating and disseminating media and messages to their audience themselves.

Developments in platforms and products over the last few weeks illustrate how quickly these shifts are accelerating. They aren't just affecting marketers, but also "real" publishers, i.e. media companies that are suddenly faced with new and largely untested ways to deliver and monetize their content.

In the Q&A following the f8 keynote, Facebook founder Mark Zuckerberg was asked how brand advertising will change. His reply? Ads are becoming more social.

Sure, Facebook will still feature display ads. Açai berry diets and special deals on tooth-whitening for alums of [fill-in-your-alma-mater] aren't going away in the foreseeable future. But these flabbily targeted ads aren't where Facebook is going to make real money.

In large part, Facebook is staking its future on apps. Media apps, to be specific, that offer Facebook users new ways to consume content: music, movies, news, and books without leaving the confines of Facebook. Spotfiy, Hulu, Netflix, Yahoo, and the Washington Post are some of the first to offer content within apps within Facebook.

New value exchange
The traditional media value exchange has always been that users spend a portion of the time they spend consuming content being exposed to advertising. Currently, the WaPo Facebook app displays no ads whatsoever (this could well change). Instead, if a user clicks an article, they spread it. Their network is notified that so-and-so is reading such-and-such, encouraging more discovery and click-through.

The usual demos aren't going away, but in this newly socialized form of advertising, users will be targeted by advertisers based on what they listened to, watched, or read. Sure, a concert promoter can try to sell you tickets to Lady Gaga, or prompt you to buy her latest album, if that's what you're into. But it goes deeper than that. In a conversation a few years ago with Spotify founder Daniel Ek, he confirmed my assumption that it probably makes more sense to market black leather jackets to heavy metal fans than sell them yogurt drinks. You get the idea.

The more users use these apps, the smarter they'll get by "learning" what types of content individual users like and delivering more of it. 

Facebook isn't the only company exploring this avenue (although it's surely the 500-pound gorilla in the space).

The same day Facebook announced its changes, I happened to be chatting with Zite CEO Mark Johnson. Zite, recently acquired by CNN, is a personalized iPad magazine that understands what you like to read and gets smarter as you use it. There's no revenue model in place yet -- but there will be.

"Advertising is something we want to look at, but I really want to do it right," Johnson told me, "I don't just want to just deliver Heinz ketchup ads in the middle of a food and wine section. We want ads to almost look like content to users. The holy grail is to really recommend great ads."

Sounds suspiciously like branded content channels are about to be delivered via apps, doesn't it?

"Absolutely," Johnson said. "We've been approached by several brands that aren't just producing commercials, they're producing content around the lifestyles of brands they want to reach. We're a content-delivery device."

Don't think for a moment that Facebook (and its advertisers) aren't having the exact same thoughts.

Discovery, curation, competition
This is pretty scary news for publishers on multiple levels, starting with the fundamentals. At present, Facebook is the fourth-largest referrer to content sites, according to a recent Outbrain study. As more content purveyors offer more app-based content within Facebook itself, that balance could shift even more. Publishers will have to consider enclosing their content within Facebook apps to promote discovery and sharing, or risk losing traffic and eyeballs.

In the meantime, their advertisers will seriously consider decamping and/or competing directly with the publishers they now support with advertising dollars. Those who don't abandon advertising completely (likely the overwhelming majority) need to seriously reassess how to reach consumers in an even more fragmented media ecosystem. They'll be bombarded with even more (and purportedly more relevant) content, models for adding adds to content-delivery apps aren't yet in place, much less best-practiced, and they need to think "content over campaign."

This stuff is getting complicated!

One thing’s for sure: more and more media will be consumed on and within Facebook. Given the size of its user base, it's inevitable. Content delivery is shifting to embrace apps in a major, major way; not just on Facebook, but on mobile platforms as well.

Just as Gens X and Y make no distinction anymore between what was once a clear delineation between cable and broadcast TV, there's a lot of vested interest out there in erasing the distinction between "real" and "branded" content. Instead, whoever creates the best (most popular, most useful) content wins.

Publishers and advertisers, fasten your seatbelts. It's going to be a bumpy ride.

Rebecca Lieb is an analyst, digital advertising/media, for Altimeter Group.

On Twitter? Follow iMedia Connection at@iMediaTweet.



Rebecca Lieb has published more research on content marketing than anyone else in the field.  As a strategic adviser, her clients range from start-up to non-profits to Fortune 100 brands and regulated industries. She's worked with brands...

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