Facebook Gambles with Social Advertising — Will It Pay Off?

Facebook is trying to mine precious advertising value from its young, computer-savvy userbase with a new “social advertising” approach. Our prediction: It will either present a huge profit or a huge disaster.

The plan, currently being tested in small doses but not yet formally announced, is basically to treat the ads like the rest of the site. You’ll be able to leave comments, share virtual gifts with other users, or become a fan — the equivalent of a friend in a normal profile. The whole thing is really just an interactive widget, only customized to look and act like typical social media content.

You can see why advertisers would latch onto the idea. If people are becoming engaged with their ad, they’re more likely to look at it, spend time on it, and refer other people to it. Initial advertising success, of course, is measured largely by click-through rates, so attracting people and bringing them back repeatedly can have great benefit.

But here’s the thing: We all know how obnoxious some folks can become when hidden behind the masks of their monitors. Imagine the kind of immature comments you sometimes see on blogs and news sites — then imagine how much more frequent and offensive they could become when the content itself is an ad. Most Facebook users are probably smart enough to pick out commercials. Will they tear the companies a new one, right on their own paid spots? Or just ignore the things altogether?

In the long run, one could theorize that clicks are clicks — and even if people are leaving remarks that belittle the company, they’re still spending the time and giving their click-gold. At the same time, though, the company’s end goal is to achieve marketing success. A flame-filled ad may deliver a short-term goal of traffic numbers but may ultimately undermine the company’s campaign and not pay off in the end.

So will Facebook hit the jackpot on this one? Or will it be a short-lived, fast-failed experiment? Time, soon enough, will tell.

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