On The Future of Digital Advertising

I just read an article in the NY Times on the “latest breakthrough” in advertising: personalized retargeting. Essentially when you visit an online store and peruse their products, but navigate away without actually purchasing anything, you will be targeted. For a set period of time following that incident you will be hit with targeted ads on those products you had viewed in hopes that you will reconsider your decision to not purchase them.

Like the NY Times states, this form of advertising is not new, though its presence is increasing. But I’m not going to discuss personalized retargeting as adding my opinion to the ongoing shout match would accomplish nothing. Instead, I would prefer to discuss another form of advertising, one that relies on your social network to deliver custom-tailored content to you.

This form of advertising is also not new. Google has been trying to do it for quite some time now. However, one company in particular could leverage its current position to control this aspect of the advertising realm: Facebook. In fact, Facebook has had a foray with such activities.

How Facebook Beacon Worked

Beacon was by far the most controversial Facebook advertising option. Beacon was a bit of code that any marketer could add to their site (1) so that, upon specific actions like buying a book, subscribing to a service, or posting to a blog (2), the site would notify the visitor’s Facebook profile of said action (3 & 4). From there, the action would get posted to the user’s news feed for all of his friends to see (5 & 6).

The ultimate persuasion: your friends did (or bought) something, so you want to do (or buy) it too. It’s no secret that Facebook Beacon was very effective. Just take a look at its partner websites. Respected brands such as those listed wouldn’t half-ass their marketing campaigns. They wanted the best, and at the time Facebook Beacon was the best. However, Facebook Beacon would inevitably have to deal with a privacy backlash, which led to its eventual demise.

The Future of Advertising Is Social

The class-action lawsuit that followed Facebook Beacon’s privacy backlash did not change the fact that Beacon was extremely successful due to its social aspect. It is for this reason that Facebook has essentially rehashed Facebook Beacon via the Facebook “Like” Button, which lets a user share a website’s content with friends on Facebook.

Like I’ve said before, an advertiser’s ability to leverage a consumer’s social network is priceless. Google’s attempts at controlling this form of digital advertising have ended in relative failure. Their current offering, dubbed Google Friend Connect, has failed to take off since its inception back in 2008. Google knows that the future of advertising is social. They are also more than aware that they are stuck playing catch-up to Facebook. Unless Google reinvents itself, they will end up getting surpassed. I wonder if Google’s investors realize this?

Facebook Should Leverage Its Position & Relaunch A Beacon Equivalent

Facebook needs to capitalize on its current position. They certainly should not let this opportunity to one-up Google go to waste. I would suggest that they start utilizing their social graph in extreme ways. This would be equivalent to what Google did back in 2003 when it first introduced its automated, content-targeted ad network, except in this case Facebook would leverage its social network to deliver automated, social-targeted ads.

The “Like” buttons are already in place. The backbone is there. All Facebook has left to do is design an advertising network (similar to Beacon) that doesn’t violate a user’s privacy. Retailers such as Zappos, Amazon and others would jump at the chance of leveraging a customer’s social network. (Remember, they already did so with Facebook Beacon). I won’t discuss potential revenue figures, but obviously the numbers for Facebook are huge.

So there we are, the future of digital advertising is less about what you are doing (personalized retargeting) and more about what your friends are doing (social network advertising). Some things never change. Peer pressure, for one, will always have a substantial affect on the masses. I hope the NY Times wakes up and realizes this by following up their original article on personalized retargeting with one on social network leveraging.

Credit for the above image goes to Matt Dickman over at MarketingProfs.