SpectatorBytes

Last week, during a lunch with a former colleague and Jeff Ocampo-Tan, one of my associates at Velocity, we engaged in a discussion about the opportunity Facebook (FB) has in building its brand advertising revenues. The New York Times recently reported (see here) Facebook has faced some challenges in doing so far. However, these challenges are no radically different than those confronting the majority of Web players in attracting brand advertising to their sites.

In talking to advertisers and media buyers, they indicated that have been reluctant to move significant portions of their ad budgets to the Web for three main reasons:

- Banners do not offer a differentiated value proposition to TV or print. Awareness and reach are not enough. Marketers want engagement and measurability from the Web. Current formats do not fulfill that goal.

- Reconciling spend on the Web and other media is complex. The lack of standards has not helped.

-Most of the activity on the Web is taking place in environments dominated by user-generated content, which brand advertisers remain uncomfortable sponsoring

In an effort to address these issues, brands have been working with Web publishers and vertical ad networks to develop ad campaigns which leverage the power of the Web. In many cases, these solutions are custom Websites, micro-sites or applications that enable brands to engage and communicate with their customers. These are some examples from Starbucks, British Petroleum and Nike. Johnson & Johnson’s Baby Center (led by Tina Sharkey) is probably the best example on how brands are leveraging content sites to create a powerful marketing platform. The value of brands grow as these sites succeed in building a dialog with their customers.

This thought leads me back to Facebook. Facebook has a unique opportunity to enable brands to easily create custom Websites and more importantly to aggregate communities of customers with whom these brands can communicate. Facebook has unique information about its users that would allow a brand to use highly targeted call-to-action ads (in the form of sponsored banners or sponsored activities in the form of trivia quizzes and games) to invite users with a particular interest (relevant to the brand) to join a branded group. FB users have been segmenting themselves by creating groups around specific interests (which may or may not include their friends). Brands should leverage these dynamics to aggregate groups of core users which align with their brand messaging - Nike and running, BP and energy security, J&J and newborn babies.

Facebook’s fan pages for products are a step in this direction. However, as the NY Times suggested, this initiative seems to have fallen somewhat short. In reviewing several of these product pages, I discover that they lack some key ingredients to build successful sites: a unique value proposition and fresh, compelling content for the community. In addition, these product pages are structured more like a profile page rather than as a content & community site where brands (and/or their agencies) can communicate their messages. Brands are partly to blame as they do not seem to make much effort around making these pages fresh, timely, and relevant. I also felt it was hard form me to identify whether or not a page was “official” or not.

So, what would we do if we were to play as Facebook’s Revenue Czar for a day:

- Format the product pages more like a content site rather than a profile page. Also, make it easy for brands to leverage existing content they have on either their .com sites or from third-party providers on the Web to populate their Facebook environments with news, photos, videos, etc. Professional content is important because brands are unwilling to sponsor user-generated content. FB can partner with a couple of innovative brand marketers to determine the optimal format for this environment.

- Work with brands to identify specific communities of interest that they would like to aggregate. For example, Ralph Lauren may want to engage hard core Rugby players and provide them with news and information about the sport, Ralph Lauren-sponsored Rugby events, etc. Brands could create multiple interest-based environments depending on how they want to segment their customer base. Further, FB is well-positioned to determine how to best target and aggregate these communities based on data around user interests and conversations.

- Offer marketers tools that enable the insertion of “engaging” creatives and media buys (sponsored banners) which allow advertisers to build or grow the audience for their FB sites. As indicated above, this would include providing marketers ability to target individuals with particular interests (on an anonymized basis). No one is better positioned to do this than Facebook. It is important there is a clear correlation between the level of spend and the size of the audience that can be attracted to the site. The more predictable this relation is, the more scalable this ad solution can be.

- Mark the sites (or groups) as officially sponsored by a brand. The word sponsored would not only be part of the banner ads but also on the landing page. This would help differentiate these branded environments from those that are user created.

- Provide the marketers tools to monitor the conversations, comments and postings. Brands need to be able to manage the activity in their sites. While brands would benefit from fostering conversation among their users, they will continue to demand control over their messaging at all times.

- Create features that make it easy for marketers to stimulate activity in their site (or sites) and to leverage its fan base for “spreading the word”. For example, if a brand has a particular “quarterly” promotion which cuts across all their environments, the format on these environments should allow for that to happen. Community members should also be able to let a brand know when they want to be notified about new content, promotions, forum activity, etc.

- Provide compelling metrics and reporting that allow marketers to contrast their efforts vs. other media

These were some of the few ideas that we came up during our lunch. I thought it was worth sharing with you.This does not mean that it is easy to do. The industry needs to work on educating marketers on the value of the Web as a medium for brands. Ultimately, the communities that advertisers build with these tools will represent real long-term value for their brands and companies.

It is important that brand dollars move to the Web in order for the industry to capture value and we believe that Facebook could be a catalyst for that - even in these difficult economic times.

Your thoughts are much appreciated.

 Update: The Wall Street Journal reports on  how sites are having to provide more compelling solutions for marketers during this difficult time. Although, they do not discuss social networks, this article is relevant to this discussion.