Facebook Ads to “Generate Demand”, Sink AdWords: Not Bloody Likely

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The Wall Street Journal reports today on Facebook’s ad targeting plans. Currently, advertisers can target ads based on age, sex, and location. The new service would allow ads to be targeted based on all the information that users post in their profiles (e.g. favorite movies, music, schools attended, religion, political views, etc.).

Both the Journal and TechCrunch make like Facebook’s ad approach is going to poise a serious challenge to AdWords. I’m skeptical.

A few problems:

  1. While it is truly amazing how much people will disclose about themselves in their profiles, this information is explicit and is therefore biased (as discussed earlier).
  2. Some Facebook applications are injecting meaningful implicit information into the system (e.g. the Twitter and del.icio.us Facebook apps), but when Facebook fatigue sets in, will Facebook have enough of this information to target accurately?
  3. AdWords’ “demand fulfillment” approach–targeting based on what the user is searching at the moment–is far more powerful than Facebook’s proposed “demand generation” approach, which will try to predict interests from much older, more static profile information.
  4. Users are just having waaay too much fun on Facebook to notice ads. As the WSJ states:

    “The addictive quality of social networking means users are so busy reading about their friends that they hardly notice display ads and, even if they do, are loath to navigate away to an advertiser’s site. Advertisers say the percentage of people that click on display ads is lower on Facebook…”

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