Rounding out a week that already has seen MySpace.com announce a new advertising network, Facebook has announced plans for its own new advertising system aimed at allowing businesses to target advertising to users of the popular social networking site.
More than 60 companies, including Blockbuster, CBS, The Coca-Cola Co., Sony Pictures Entertainment and Verizon Communications, have already signed up to use the new Facebook advertising system. Facebook ads have three parts, the company announced at an event in New York. The first will allow businesses to build pages on Facebook to connect with the consumers they are targeting. The second will include a system that supports the spread of marketing messages virally through Facebook Social Ads. Finally, the system will allow the businesses to gather insights into users' activity on Facebook, according to Mark Zuckerberg, founder and CEO of Facebook.
More than 100,000 new Facebook pages will be launched by various advertisers, he added. On these pages, businesses will be able to add any content they want, including photos, videos and music. In addition, developers have already created a variety of applications for booking reservations or providing restaurant reviews that can be used on the commercial profile pages.
For example, Coca-Cola announced a new Facebook page on Tuesday that will feature its Sprite brand and will allow users to create, configure and interact with an animated Sprite character. The company also plans to run a series of ads for Sprite targeted at Facebook users.
Facebook users will be able to share information about a business directly with the company by adding reviews or other information to that business' page.
"Social actions are powerful because they act as trusted referrals and reinforce the fact that people influence people," Zuckerberg said in a statement. "It's no longer just about messages that are broadcasted out by companies, but increasingly about information that is shared between friends. So we set out to use these social actions to build a new kind of ad system."
Facebook also will give marketers metrics on activity, ad performance and user demographics to help them with ad targeting, Facebook said.
Jeremiah Owyang, an analyst at Forrester Research, noted in a blog post that with the Facebook advertising initiative, the traditional marketing funnel is distorted; endorsements are now passed from trusted consumers to prospects, not directly from the companies marketing the brands themselves.
"Facebook ... evolves advertisements to endorsements and encourages members to subscribe to a brand in what we are calling 'Fan-Sumers' (an evolution of the consumer)," Owyang wrote. "As consumers share their affinities, brands can advertise using trusted social relationships. Going beyond just profile matching of advertisements, Facebook allows consumers to self-identify with brands and becoming fans. In turn, brands can use these 'Fan-Sumers' as endorsers to their own trusted networks, resulting in trusted word of mouth."