Facebook Ads + Your Friends = Better Performance

Article first published as Facebook Ads + Your Friends = Better Performance on Technorati.

If you've ever advertised on Facebook before, you have probably been impressed with the ability to target users based on their age, location, interests and relationship status. Unlike many traditional display campaigns, Facebook lets you hyper-target and focus your ads on the people you want to most.

The challenge that many advertisers have seen to this point, though, is that Facebook ads have typically performed exactly like normal display units - they have low click through rates and are not driving the metrics that many advertisers hope for.

Recently, Facebook re-launched the Sponsored Story ad units. These seven units allow advertisers to leverage user actions (i.e. checking into a Starbucks) and target their ad to the friends of that user (i.e. Show that 'Sam has just checked into Starbucks' under a Starbucks execution).

Early testing of these units by a series of ad networks have shown a 46% increase in CTR and an 18% lower cost per fan. These metrics are certainly positive for advertisers, however they should have been expected. Why?

People who use Facebook do so for a simple reason - they want to connect with their friends and see what they've been up to. Our attention is drawn to the Stream and we all scan through the real-time stories, photo uploads, status updates and check ins that are happening within our network. In the past, Facebook has simply placed ad units beside the Stream or jammed them into the stream as a separate update. But if you had the choice to click on a random ad or a link that one of your friends had posted, which would you choose? Friends will always be more engaging than ads.

And Facebook knows this. The key for the site is to move closer to a world where friend updates and brands are more closely associated with one another. The site will always keep a 'users-first' mindset, but the Sponsored Stories are a way for Facebook to show advertisers that they are serious about improving performance.

Advertisers are excited about the early results from Sponsored stories. Attaching themselves to real content makes engagement more likely. The challenge for Facebook is that many users may not want to have their updates repackaged and sold to brands without their knowledge or consent.