Facebook’s Risky Ad MoveWritten by Pace Lattin
December 27, 2011 # 12:53 pm # Industry News # 2 Comments
Facebook has announced that it will start putting ads in the news feed, a move that will grow their advertising inventory many-fold. However, it’s a very risk move that might actually end up harming them. A screenshot below shows an example, highlighting a Ben and Jerry’s campaign.
The reason for this addition is simple: Facebook wants to report as much revenue before their IPO and is trying to ad as many advertisements in order to generate additional income. While Facebook’s revenue is already enormous, there are always those who wonder if it can continue, when faced with diminishing value as click-rates continue to fall month after month
Still, at a value of $45 Billion according to some financial analysts, why would Facebook need to create what some see as an extremely intrusive advertisement? They have already changed their design several times this year, so much that it’s no longer even recognizable as Facebook.
A Facebook spokesperson told ClickZ News:
“We want to be really thoughtful about this, so we’ll have a lot of rate limits in place. We hope to show people no more than one Sponsored Story in their News Feeds per day and we’ll clearly label the story. They’ll also be of the same size and treatment as other stories in News Feed.”
One can only wonder why Facebook is taking more chances, facing lawsuits and increased scrutiny from regulators. Just recently a federal judge refused to throw out a lawsuit claiming that certain Facebook Likes could be illegal.
Facebook is confident despite this, that their user base will remain extremely loyal and ignore more and more intrusion into their experience. Of course, internet users have proven to be extremely finicky, as Myspace learned very fast when most of their user base turned to Facebook.