Facebook aims to encourage word of mouth

09 July 2010

PALO ALTO, California: Facebook, the world's biggest social network, is rolling out new features which it hopes will stimulate positive word of mouth about brands among its members.

The pioneering Web 2.0 platform is set to introduce "social context ads" that tie in the friendships between its users with their favourite companies.

Ford and PepsiCo have expressed an interest in this format, which will appear on the right-hand side of an individual's homepage, alongside an image and headline from the relevant advertiser.

Where one of the consumer's contacts has indicated their approval for a product or ad by signing up as a fan, their name will also feature in this box.

There is an opt-out button for any netizens reluctant to declare their preferences in such a way, but Facebook has not revealed how many people have chosen to follow this route thus far.

The social network also commissioned a study by Nielsen which found that social ads can boost brand recall by 68% and increase awareness of specific messages twofold.

Major marketers are displaying enthusiasm for this strategy, Facebook claimed, citing the example of a deal with Nike, which employed this tool in 20 separate countries before that start of the World Cup.

One potential obstacle is price, as it costs around $100,000 (€78,957; £66,000) for each homepage ad, in comparison with approximately one dollar using Facebook's cheapest offering.

"Marketers have always known that the best way to sell something is to get your friends to sell it," Sheryl Sandberg, Facebook's chief operating officer, said.

"That is what people do all day on Facebook. We enable effective word of mouth advertising at scale for the first time."

Ford, the automaker, believes more personalised ads could be broadly in keeping with the overall purpose of Facebook, as they will encourage interaction.

Having largely avoided formal advertising programmes on Facebook to date, it is considering buying up social ads to champion the launch of the 2011 Explorer.

"It fundamentally comes down to why people are there on social networks. They are not there to read our ads. They are there to talk to each other," says Scott Monty, head of social media at the car manufacturer.

"They made a very attractive case," he added, when describing the evidence provided by Facebook to demonstrate the efficacy of this tactic.

Shiv Singh, the director of digital engagement and social media at PepsiCo, was equally optimistic about the prospects of this latest addition to Facebook's portfolio for marketers.

"The social ads are interesting, because you feel that you are connecting to a brand through an endorsement from someone. The ads perform better," he said.

Facebook received 130.3 million unique visitors in the US in May 2010, according to estimates from comScore, the research firm.

It also delivered a greater number of banner ads to the online audience than any other publisher in the country during this period, overtaking Yahoo on the measure for the first time.

Data sourced from Wall Street Journal; additional content by Warc staff