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Unformatted text preview: can match. While Facebo o k do esn’t sell banner advertisements, the pro ducts described abo ve are co nsidered
display ads. Facebo o k serves three times mo re display ads than anyo ne else o nline.M. Walsh,
“Facebo o k Drives 31% o f Display Ads in Q1,” MediaP o st, May 4, 2011. As f o r the increased
spending by advertisers o n Facebo o k, o nly time will tell if GM’s experience is an ano maly o r a
tro ubling trend and if Facebo o k can create new pro mo tio nal mechanisms to f urther f uel gro wth.P .
Kaf ka, “Facebo o k Isn’t Eating Go o gle’s Lunch Yet, but It’s Getting Hungry…,” AllThingsD, March
13, 2011. K E Y TAK E AWAYS
I ssues of content adjacency and user attention can make social networking ads less attractive than ads running alongside search and professionally produced content sites.
Google enjoys significantly higher click‐through rates than Facebook. Rates are lower since users
of social sites are there to engage friends, not to hunt for products. They are less likely to be
drawn away by clicks.
Display ads are often charged based on impression. Social networks also offer lower CPM rates
than many other, more targeted Web sites.
Many firms have begun to experiment with engagement ads. While there have been some
successes, engagement campaigns often haven’t yielded significant results
Despite concern, Facebook ads have grown at a tremendous rate and are highly profitable.
Facebook ads offer advantages of improved targeting and social engagement. Ads allow
customers to endorse a firm’s offerings and to virally share a message with others. Facebook can
leverage customer engagement in its own ads. And Facebook allows firms to continue to send
messages to the news feeds of users who have “liked” their presence on Facebook. QU E S TI ONS AND E XE RC I S E S
1. How are most display ads billed? What acronym is used to describe pricing of most display ads?
2. How are most text ads on Google billed? What’s the appeal for advertisers?
3. Contrast Facebook and Google click‐through rates. Contrast Facebook CPMs with CPMs at
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