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Why knowing so much about us could be Facebook's advertising downfall

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By Pete Wood

August 16, 2012 | 3 min read

Facebook today revealed plans to trial putting adverts directly into its users' newsfeeds - whether they want them or not. So will the site face a backlash from its members? And will these promoted ads even work? Steak's Peter Wood considers the implications of Facebook's latest crack at commercialisation...

How a Facebook newsfeed ad will look

Poor old Facebook. It’s all grown up now. It debuted on the stock market to an anti-climax and now they have to answer to profit hungry shareholders. Mark Zuckerberg has taken a beating from the corporate profit stick and today his platform fought back after a few horrible weeks which have called into question the value of Facebook, the value of Facebook clicks and whether their users even exist.

Today they publicly announced that the newsfeed was now game for advertisers. Another example of the freemium model of advertising for Facebook page owners evaporating and another slap in the face for users who thought the platform should remain free forever.

What implications does this have for Facebook? Well, I’m not sure it’ll have any other than long term profit increases. Facebook has effectively been a giant honey pot for the last 5 years. They’ve lured us all in, they’ve dazzled us with simplicity and connectedness and now we’re all there to the tune of 1 billion, they’re going to give us a dose of advertising reality.

Will people care? Initially, of course they will. With every new update you can count on a two day outrage. One of the biggest outrages was the introduction of the newsfeed in the first place (the irony being that the newsfeed allowed the newsfeed outrage to go viral in hours). Facebook will overcome this though. Their main challenge is advertising relevance. Twitter are a fine example of a brand who nine times out of ten get their sponsored tweets right. Can Facebook achieve the same thing? Well, you’d like to think so, they have far more information to deal with, which I guess is probably going to be the problem. Twitter knows my interests are Arsenal and social media (a man of simple tastes). It’s not difficult to work out what I’m really interested in. Facebook knows too much information to be pinpoint targeted which could end up in a slightly shambolic approach to advertising. Knowing everything I loosely like is far less potent than knowing the 3 things I love.

If Facebook can nail relevance in the same way Google did, then expect that George Soros Facebook investment to look very, very smart.

Peter Wood is UK social media director at Steak Digital

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