Advertising's current metaphor of interruption may not be sustainable. Michael Wolff's analysis of Facebook's reliance on advertising is quite spot on.

"The daily and stubborn reality for everybody building businesses on the strength of Web advertising is that the value of digital ads decreases every quarter, a consequence of their simultaneous ineffectiveness and efficiency."

technologyreview.com

I agree that traditional advertising and marketing doesn't seem to work terribly well online, whether at Facebook or anywhere else. My favorite comment about it comes from Sir Martin Sorrell of WPP, who said that "You interrupt social conversations with commercial messages at your peril." Whether trying to get users to create ads with their behavior ("sponsored stories" etc.) is any better, I don't know.

There are two separate things going on here. One is the substance of the "Ad" or the interruption. This is what agencies create. Then there is the placement of that.

Publisher's, like Facebook, are pushing better placement which is a race to the bottom, independent of the quality of the creative.

I really like what Twitter has done with NASCAR this weekend. I see that as "advertising as product". But not sure how Charmin or any other CPG could use it.

Derek Thompson wrote a great article recently for The Atlantic which talked about the value of their users and the challenge it poses to their current business model.

"In 2011, Facebook made $4 per user per year. To earn its market cap of $100 billion today, it would have to earn five-times that figure per user. This sets up a tug-of-war over user information. Facebook has lots of it. Advertisers want to see more of it. Users want them to see less of it. The true value of Facebook could depend on who wins that turf war."

theatlantic.com

Seems like their current model was inevitable, given the costs to create the user base. I don't know of another model that could have allowed them to grow so quickly without making this sacrifice.

I'm going to go a little off of what the general discussion has been so far. I've always thought that Facebook could do better by charging for-profit organizations for pages - after all, pages are part of the user's social network - maybe some cents per like.

Imagine a shopping mall, which leases? out shop spaces to different businesses. Customers came of their own volition. Can't Facebook Pages be the same, because users do explicitly like the pages they are interested in...

Yes but you still have the awareness problem. How will people learn about these stores? They will still need to interrupt you and say, "Hey we exist".

The best way to get around the awareness problem is to improve search. Interruptions in a social context are rarely going to be beneficial unless they provide relevant, timely, valuable benefit. Knowledge that a store exists is not helpful, whereas an interruption to say that "your connecting flight is cancelled, don't get on the plane you are about to board - there is a direct flight that leaves here in one hour." To so this the user is going to have to give away some privacy.

Facebook's problem is that people can easily read page content without ever looking at the banner ads. If they try to be more intrusive with pop ups, pre-rolls and other abominations users will just get angry. I suspect that native advertising is probably the least annoying, though not everyone likes that. Perhaps the ideal solution is to find creative answers like Nike did with its shoes at the Olympics, but this level of creativity is not for everyone.

Brands need to remind you they exist. You are assuming we hold in our head the sum total of all solutions to our problems. We rely on advertising to make us aware of new solutions to our problems. Sometimes it's to problems we never knew we had.

Brands may have this need, but I don't think mobile social media as the best avenue for reminders (at the moment). I think brands could be better at listening and observing from social media.

James, the tension that exists is that brands what to interrupt you but we don't want to be interrupted. Moving advertising to a service model makes sense, except it scales like shit. The idea that a company can deliver a single concise, consistent message in a mass way is eroding. The problem is that Facebook is still trying to help brands deliver these types of messages. Now Facebook would argue that the social graph allows these interruptions to be more relevant but it mostly feels like an interruption not a service.

Agreed. I think Facebook advertising model is still smoke and mirrors, and has to my mind two central flaws:

Users have been trained to ignore web adverts. There may be some subliminal benefit, but my belief is that users ignore these even if the targeting is correct.

Users are moving to mobile. Advertising on mobile devices is extremely annoying to users.

The one item that is left out of this conversation is the value Facebook provides in knowing what we're interested in combined with their ability to take that knowledge to places where we do consume advertising, willingly. The Martin Sorrell quote earlier is spot on. Advertising inside of a social settings is a terrible idea. However, taking the information brands can glean from social settings and using it in places where we enjoy ads is uncharted territory. Privacy is gone as soon as you put your name into FB and I postulate that most users would be happy share their FB account with their cable providers and magazine publishers to see relavent ads for things they might actually want to learn about...

Samtemes - I agree that most FB users might be happy to do this, but my feelings are that these users would not understand how much information they would be exchanging. FB's privacy settings are increasingly becoming less prominent to the average/uninformed user. This raises the potential for consumer blowback.

You may have already seen this, but a recent study backs up the majority opinion here that the traditional banner ads w/ irrelevant content aren't popular for FB users...insidemobileapps.com

The study looks interesting, but opens up several questions from my perspective. From the language I assume that the reason the respondents prefer the immersive adverts is because of the opportunity to win rewards, rather than their immersive nature. I would like to know more.

Also, wondering what the distribution of age and income was (along with the breakdown of mobile devices).

Thanks for sharing!