Facebook Introduces Premium Ad Model

by Jordan Richardson on March 1, 2012

Ahead of its initial public offering, Facebook is introducing what it calls a premium advertising model.

The new “Premium on Facebook” features allow advertisers to pay to market to Facebook users directly on news feeds on computers and mobile devices. At an event to lure advertisers at Manhattan’s American Museum of Natural History, Chief Operating Officer Sheryl Sandberg also introduced remodelled Facebook pages and timelines that advertisers can use to generate new advertising content.

The new Facebook pages will also be available on mobile devices starting later in the year and the advertisers seem to like what’s coming down the road.

“Mobile Facebook ads are huge. We’ll be all over this,” said Jason Goldberg, chief executive of online designer retailer Fab.com. “We’re already seeing more than 40 per cent of our daily traffic to Fab from mobile. Being able to reach Facebook mobile users will only increase that.”

According to firm eMarketer, companies are spending around $76 billion per year on advertising. Facebook, who relies on advertising for at least 85 percent of its revenue, is looking to ensure that their piece of the action stays intact. The upcoming IPO is expected to net $5 billion for the social networking site’s 845 million active users, so that’s a veritable land of milk and honey for advertisers.

But the issue is, as we’ve discussed extensively, one of balance. For a company that relies so heavily on advertising dollars for its actual bankable value, peeving off its users with intrusive and/or annoying marketing techniques could mean the difference between 845 million and 8 million. How invasive will the news feed advertisements be? We’ll have to wait and see.

Right now, Facebook seems to be striking that balance well enough. According to industry researchers at Gartner, the social networking giant accounted for about 28 percent of all graphical advertisements viewed in 2011. The bulk of the advertisers making use of the Facebook model are small-to-medium businesses, however, and the large companies have mostly lingered in the background.

With the Premium Ad Model and the revamped pages, Facebook is hoping to change that and lure more cash value through netting bigger fish. Facebook’s pages, used by retailing giants like Wal-Mart, can be set up for free. The trick is in luring the larger advertisers and companies to some of what Facebook has to offer with respect to other “paid” marketing services.

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Written by: Jordan Richardson. www.digitcom.ca. Follow TheTelecomBlog.com by: RSSTwitterFacebook, or YouTube.

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