Wednesday, December 5, 2007

Should Facebook Run More Ads?

DECEMBER 4, 2007

It has the space.

Facebook is getting more attention from marketers since announcing that it would open up member profiles for targeted ads. But the exact model for those ads is still developing.

comScore Ad Metrix has said that while Facebook currently trails MySpace as an ad platform, it has greater potential for relative growth.

"[There is a] huge upside that exists for Facebook to increase its advertising business relative to MySpace by continuing to build its user base," said Gian Fulgoni, Chairman of comScore, on the company's blog.

The research company said that in September MySpace had 68.4 million unique visitors, more than twice as many as Facebook. MySpace visitors also viewed 1.4 times more pages per visitor and saw 2.2 times more ads on each page viewed (with each ad being about twice the size of the ads run on Facebook).

That is more than six times as many display ad views as Facebook, giving it a lot of room to increase the number of ads they are delivering per page viewed.

comScore also found that Facebook unique visitors were up 129% in September versus a year ago, compared with 23% visitor growth at MySpace.

But the focus on ads may be short sighted, according to Debra Aho Williamson, senior analyst at eMarketer.

"More ads per page may not be the answer for Facebook," Ms. Williamson said. "One of the hallmarks of the site has been its clean appearance, and many of its members appreciate that. Adding more display ads to a page may increase the impression count but it will surely turn off many Facebook users."

"The better strategy is to deliver the right ad to the right person via precise targeting, not to show more ads to more people just to increase the number of impressions," she said. “Of course, Facebook must also respect the privacy concerns of its members.”

Social networks will account for 6.9% of all online ad spending in 2011, up from 4.6% in 2007.