Why Facebook Likes Small Ads, Despite the Small Dollars

14 Nov Why Facebook Likes Small Ads, Despite the Small Dollars

New York Times, By Saul Hansell, November 13, 2008

There was an ad on the front of both Facebook and MySpace Wednesday promoting the Fox movie “The Day the Earth Stood Still.” The two ads couldn’t have been more different. On MySpace, the ad filled the most of the page, and when you clicked on it, you jumped to the movie’s Web site. The ad on Facebook was a tiny rectangle in the right-hand column of its home page. Click it once, and you saw an equally tiny trailer for the film. Click again, and you were invited to send your friends your list of what things you would want to preserve if the Earth were about to be destroyed. When it comes to advertising, Facebook is thinking small. That means small ads and correspondingly small revenue, especially compared to MySpace. Indeed, Facebook is taking a lot of heat because it isn’t making much money from advertising (for its size) and marketers don’t seem to be all that excited about what it is offering them. During a recent visit to Facebook’s Palo Alto headquarters, I discussed the company’s approach to advertising with two executives: Dan Rose, the company’s vice president of business development, and Tim Kendall, its director of monetization. They told me that Facebook is searching for forms of advertising that fit quietly into the fabric of its community, rather than trying to interrupt or distract users, as most ads do. “The classic interruptive model is a pretty uninspired way to really get to a consumer,” Mr. Kendall said. “If we build ad products that really take advantage of how users interact on Facebook with each other, it will be much more effective over time.” The standard for low-key advertising has been set by Google, which has become the biggest media brand in the world through tiny text links. But for ads trying to build brand awareness, rather than answer search queries, this is much harder. At first, MySpace tried to get advertisers to make their own profiles on its site so they could befriend other users. But this didn’t take off, and it moved on to the giant graphic it calls the hero ad.