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Facebook, Tumblr Introduce Controversial Advertising Options

Posted by Sheila Shayon on March 6, 2013 02:34 PM

As Facebook gets ready to unveil its new ad-friendly newsfeed on Thursday, concerns are rising over Facebook's efforts to improve its revenue streams with sponsored posts and paid placement on newsfeeds, though Facebook is far from the only social company exploring new ad options as the global mobile ad market is predicted to reach $11.4 billion this year and $24.6 billion by 2016, according to Gartner.

When the New York Times’ Nick Bilton observed the "Likes" on his Facebook page “Disruptions” dropping while his followers increased, he began paying $7 for sponsored advertising of his posts that resulted in a 1,000 percent increase in "Likes" and "Shares."

“This may be great news for advertisers, but I felt slightly duped,” writes Bilton. “I’ve stayed on Facebook after its repeated privacy violations partly because I foolishly believed there was some sort of democratic approach to sharing freely with others. The company persuaded us to share under that premise and is now turning it inside out by requiring us to pay for people to see what we post.”

Those using Facebook for business are also impacted. “It’s not just that people will feel nickeled and dimed by this, it’s that ultimately the value of the product disappears as the stream of information in your social network, one that used to be rapid and friction-free, is no longer there and now consumed by advertising,” said James McQuivey, analyst at Forrester Research and author of Digital Disruption, in the Times.

Facebook’s acquisition of Microsoft's Atlas Advertiser Suite is a bet that investment in back-end measurement systems, desktop and mobile tools and improving user interface and functionality, combined with Nielsen and Datalogix, “will help advertisers close the loop and compare their Facebook campaigns to the rest of their ad spend across the web on desktop and mobile.” 

As for Facebook's redesigned Newsfeed, Techcrunch reports that the design will likely consist of seperate feeds for news, photos and music and in turn create more places for advertising. 

Meanwhile, Tumblr CEO and founder David Karp says his social blogging site will never display banner ads, as its native ad program has been so successful the company is about to launch a mobile ad product. “These mobile ads will work and act the same as its Web ads, meaning that advertisers will be able to promote posts, which is the bread and butter of Tumblr’s monetization strategy,” notes DigitalTrends.com. Tumblr’s current ad units, Tumblr Spotlight and Tumblr Radar, offer the option to promote and elevate posts on other users’ dashboards—a service similar to Facebook's. “Tumblr sells ads against its traffic. There’s over 100 million Tumblr blogs on various topics, attracting nearly 170 million monthly visitors based on the latest official Tumblr traffic stats from November,” notes DT. 

Tumblr is “not going to get into the regular ad network,” said VP Derek Gottfrid, while Lee Brown, head of sales added, “We’re not bringing them a template or format to complete. We’re giving them a canvas. That takes a lot of time and a lot of thought.” Tumblr has sold promoted posts to Target, Adidas, Lions Gate Entertainment and Christian Dior. “Marketers have become accustomed to buying scale as opposed to earning it,” Brown said in Bloomberg. “We’re not really selling ads, we’re promoting their content.”

Over at Twitter, their Nielsen Brand Effect survey tool, now available to all ad partners in the US, UK and Japan is designed to show the effectiveness of its Promoted Tweets program, running since 2010.

“Promoted Tweets increase the rate at which users associate a brand’s ‘message’ with its presence on Twitter. So if you want 22 percent more of whatever that is, then a Promoted Tweet campaign will help you do that,” and “multiple tweets in a campaign will boost ‘brand lift," writes TheNextWeb.

While the bottom line clearly indicates that promoted content equals more revenue for both sides of a partnership, it certainly highlights a concern about organic social content and the future of social networking. 

“Remember, Facebook isn’t a platform for you to use — you are a platform for Facebook to use,” notes Gigaom. "The assumption is that Facebook wants you to pay to get this kind of reach, but regardless of whether that’s what is happening, it still sends a valuable message: you are not in control — Facebook is.”

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