Underperforming Facebook Tests New Ads You Might See Soon

Facebook has been hit with some less-than exciting news lately.  Their stock is still not performing well.  When the company makes news, I always seem to go back to Andrew’s post about them.  If you read that, you’ll get a pretty clear understanding of where the company was almost a month ago, and the trouble it was in.

The company has made some minor changes since then, but nothing that has been able to influence its meager stock price.  Currently, it sits at $20.38 after opening at a $38 offering price in the latter half of May.

But Facebook recently announced some changes that look to be steering them towards a more profitable future.

What Is Facebook Currently Doing?

As it stands, the only way you receive posts or information from a company is if you “like” their page.  “Liking” a company or business page is the way Facebook and its users manage their commercial-to-consumer relationships.  The system makes targeted advertising easy for those companies, as they know ahead of time that their fans are people who want to know about their products, deals, or special offers.  It’s basically a win-win for both parties.  But it’s very hard for companies paying for ads to measure the results in concrete numbers.

Facebook’s New Ad Plan

The current setup just isn’t good enough—especially for Wall Street investors.  They want to see more, much more, out of Facebook, especially as growth rates have been declining for the company.  They have wanted to see more since the IPO.  Because, as Shayndi Raice writes on the Wall Street Journal, Facebook has been having trouble “proving that ads on the site can help marketers move products off the shelf,” hence their move to start testing a new way of advertising.

So what is Facebook doing to address this? According to Mashable, Facebook announced late yesterday “that it will begin testing promoted posts that can reach people who haven’t ‘liked’ a company’s Facebook page.” Basically, users will see an ad—which will be labeled “sponsored”— and have the option to “like” it.  Facebook spokeswoman Annie Ta states, “These ads may appear on both desktop and mobile,” and that the company believes “this will make it easier for businesses to reach more people.”

Will it Work?

This move, if it makes it out of the testing phase, will likely make it easier for businesses to reach more people.  It looks to be more traditional of an advertising method than what Facebook does now.  Plus, it seems that this method will be a lot easier for the company—and the advertisers—to track in terms of how effective the advertisement is.  Facebook does have to be careful, as this move could draw some ire from users.  Then again, every move Facebook makes draws ire from its users, including me.  I’m still angry about being forced to switch my profile to Timeline!

Anyway, back on topic.  I work in the content marketing field.  I know that while the bottom line is moving products off the shelf, there’s more to having a presence on social media like Facebook than simply that.  Social media provides a business of any size to the chance to interact with their customers in ways that they never have.  It’s an ideal situation to build a brand, loyal customers, and much more.  Coca-Cola marketing chief Joe Tripodi gets it.  He told the WSJ, “If we can get 40-million plus fans, or even some subset of them talking positively about the things we’re doing, ultimately that’s a good thing for us.”

I really can’t make a prediction on how these new ads will pan out for Faceook if they get out of the testing phase.  I’ll definitely be keeping an eye on its impact though.  In fact, we all will if ads and posts start showing up on our Facebook feeds!

Do you use Facebook to promote your business?

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Patrick currently lives in Somerville, Massachusetts, where he is studying for a Master's Degree in Intercultural Relations. Upon graduation from Penn State in 2008, he spent two years overseas in Kyrgyzstan with the U.S. Peace Corps. While writing is currently his chosen way to put food on the table, he loves fitness and exercise, which he believes makes up for his avid computer gaming habit.

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