Facebook Ads Launch: Post-event Analysis, Its A Killer App

Just got back from the Facebook Ads launch event. Here's my first take.  FB launched something revolutionary from an advertising/DG perspective today.   Mark Zuckerberg made some pretty broad marketspeak comments about fundamentally changing the shape of media for the next hundred years but then got down to the meat of it by saying:

Advertising will no longer be pushed but will be inserted into the conversations that people have.  [In this model], people influence people.

Mark then drew a typical Demand Funnel and marked the bottom 1/3 "Demand Fulfillment" and labeled the top 2/3 "Demand Generation" and stated that this is the focus of Facebook Ads to address its huge user base.  Since the platform has been opened in May the user base has grown from 24mm to over 50mm users.  Literally doubling the user base every six months.  50% of these users are on FB daily.

Mark then went on to talk about the News Feed and Mini-Feed functions which post a users activities to his or her friends/connections - his "social graph" to use Mark's term.  FB believes that the ability of the Mini and NewsFeed function to post these activities - these "Trusted Referrals" are the core to viral distribution on FB.  Think about it. If I see Ed, download the myMusic application, I then decide to and then so does my wife, my son and so on and so forth.  To reinforce the viral nature of the feed functions Mark mentioned that over 80 applications  on FB have over 1mm dedicated users.

Back to the Social Graph.. the Facebookism for a person's connections... Mark made the comment that FB and sites like it, hell, the Web has decreased the cost of communicating drastically, while increasing he amount of information that flows directly thru these social graphs in a one to many, one to few  or one to one model.  And that the hub and spoke media companies cannot compete with this model.

Facebook Ads leverages the social graph to by inserting branded messages into the conversation flow within a person's network (I just can't bring myself to use the term Social Graph any more).  The system has three core components:

1. Pages – Any entity (business, brand, product, service) can build a presence for free on FB and  provide some of the same interactive features as profiles do in that users can link to them and leave comments. This feature is free.  So companies can post pics, moderate discussions, upload videos, flash. Its a destination site for a branded presence on FB.  FB is also launching Beacon, which enables brands to display the activities of their users on their own web site and update that activity on  Facebook. For example, if I bought Pampers online from diapers.com that purchase could be inserted into my Newsfeed on Facebook.  These brand destinations are meant to be a place where a user can specify that he is fan of the brand!  I would literally join a "branded group" and designate myself a fan of that brand.
2. SocialAds – Display and text ads that allow brands to buy advertising that is associated with the interactions and networks of their fans. For instance, if I am a fan of Nike and my friend Vauhini checks my Mini-feed, she will see that (1) I am a fan of Nike and (2) every time I buy from Nike, and if she meets the targeting profile of the individuals Nike is trying to market to, an ad will display in her NewsFeed to say as much.  That targeting may be broad or specific - the ads could be deployed to everyone or they could be deployed based on very specific profiling data.  This "social ad" is presented to my connections, my network and in so doing, since it is coming from me is a trusted referral.  I am making an implicit product recommendation to those in my network.  These social ads spread virally thru the user's network and can be extremely targeted.  Mark  demo'd a killer behavioral targeting tool which gives advertisers access to all that great demographic, geographic and pseudo-behavioral data we have all loaded into our FB profiles to precisely target who they want these ads to be served to.  To me THIS IS THE MOST POWERFUL ASPECT OF FB ADS.  It really is the holy grail of advertising... think of it, 50mm users to choose from from Millenials to Baby Boomers.  All with a high degree of targeting information already collected, online and ready to use. 
3. Insights – FB has built a portal  that allows advertisers to measure the buzz (called "Pulse") around their branded messages and to manage the creative, the purchasing and placement of advertisements which will be sold via an auction and a CPM model.

I believe that the Facebook Ad platform may alter the media/advertising landscape for good by changing the way people view advertising.  In a very fundamental way, its no longer advertising but a network of product recommendations, referrals and affiliations which give the consumer more control over the brands they want to interact with on a daily basis.   Brands will have to earn the respect of their consumers (a real play for institution of Net promotion score KPIs in the Insights Ad platform) in order to expand its base.  It also transforms advertising in a very real sense into an offer delivery vehicle vis-a-vis trusted referrals.   Brands have to earn respect on Facebook because if they have  no fans, then they have no ability to advertise on the network.  Similar to what has been espoused in many Customer Experience initiatives (even that of SAP's) is the notion of putting more control back into the hand of the user. This is indeed game changing.