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Following up on Peter Krasilovsky’s post this morning, The Wall Street Journal has taken a look at Facebook’s efforts to better monetize its network. This has been an ongoing challenge for the company.

The newest efforts involve deploying its growing internal sales force to woo Madison Avenue with “engagement ads.” These are essentially banner ads that prompt users to interact with them in certain ways, such as joining a group. This can involve TV shows or music targeted to Facebook’s primary demographics.

Impressions are then achieved when the notification that someone joined a group is plastered across his or her friends’ “news feeds.” Data from engagement can also be used to target ads toward appropriate clusters of the social graph. This is similar to the influence targeting that Google has shown interest in developing through its Open Social initiative.

The downside is that in the social context, many users have proved averse to text ads. The Journal cites Forrester research that CTRs on Facebook are less than 1 percent. This is partly a result of the empowerment that users have been granted in social networks that feeds into their aversion to ads, and Facebook’s ongoing reinforcement of this through an under-monetized UI (compared with MySpace at least).

But perhaps more interesting are the efforts to attract small-business advertisers. This involves the Facebook Ads product that lets advertisers target users based on location, demographics or things they’ve made known about themselves through their profiles. We’ve covered this in the past, and it was a key theme at ILM:07.

The Journal reports that tens of thousands of advertisers are using this program. This includes search marketing firms that fulfill local ad campaigns for SMBs, such as G5, a company we’ve followed closely:

More recently, Facebook has seen some traction with an ad service for smaller advertisers that generally spend the bulk of their budgets on search-engine ads. The service allows users to buy targeted banner ads through a Web site. Facebook says tens of thousands of advertisers are using the system every month.

Online advertising agency G5 Search Marketing Inc. has used the system to buy ads for clients such as a California-based local storage company. The storage company in May found it ended up getting more visitors per dollar spent on Facebook than Google, says Dan Hobin, CEO of G5.

But he adds that only a handful of clients have tried Facebook, in part because Facebook offers to reach specific groups that are far smaller than the size of the audience his clients want to reach.

Elsewhere in the world of social network advertising, MySpace’s MyAds have shown positive metrics so far, pulling in up to $180,000 per day, according to TechCrunch. This means the product is on pace to bring in $50 million per year. Introduced last month, the product involves a self-serve banner ad creation and targeting tool, similar to that offered by AdReady (see past coverage).

This Post Has 2 Comments

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