Worth Reading: Facebook Ads Aren’t Really Display

The news that Facebook now accounts for 31 percent of all display ads served online ricocheted around the Web yesterday. Most took it as a sign of Facebook’s growing power as a credible counterweight to Google. Not all, however. Peter Horan, the former About.com CEO of media and advertising at IAC, tweeted “lots of ads but low CPMs. FB needs better ad products.” Ari Paparo, product lead at AppNexus and former Google executive, went a step further and questioned the entire premise that Facebook is even in the display business. His point: having an image doesn’t make an ad display. Facebook is “divorced from the system of supply and demand,” he tweeted in response to a question I posed. Paparo went on to describe his point of view more on his blog:
From the perspective of the buyers, there may be some overlap in budgets between Facebook and display, but there’s also tradeoffs in budget between display and search, email, video and every other “market” you might want to evaluate. So if you want to consider market share for “digital media buying” or “all advertising” then fine, go ahead and give Facebook the credit it deserves, but just assuming that all Facebook spending is competing against display is arbitrary and incorrect.
Paparo’s points, taken with Horan’s, are more than semantic. Facebook has seen tremendous success as a company. Its ad business has progressed greatly, even without being a top priority at the company. New ad chief Carolyn Everson thinks the ad business “doesn’t understand” Facebook. This could be. But as John Battelle pointed out, Facebook doesn’t necessarily get brands, forcing them to hew to a Facebook design paradigm, for instance — one which it changed without any notice. Another sobering lesson for Facebook: pretty much the same story, also premised on ComScore figures, was written about a hot social network that was dominant in display ads. That was MySpace in 2008.

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