The world's No.1 social network Facebook Inc(NASDAQ:FB) is now focussing on ensuring that its ads result in a measurable return for its advertisers in the form of generating more business for them.
Data collected by the company had showed that social ads - those connected to a user's News Feed with friends `liking' it - garner more responses than traditional display ads which appear on the side of the page. Currently less than half of the ads on Facebook are classified as social ads, but the plan is to increase this and make it more worthwhile for advertisers, who see the social network as a huge marketplace for creating brand recall.
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The inaugural quarterly results announced by the company on Thursday, showed that mobilisation of revenues are a challenge for the company with more of its users migrated to mobile devices. In the June quarter the company's advertising revenues rose 28 percent to a year ago to $992 million, but in terms of volume the number of ads actually declined 2 percent on year.
Revenues from sponsored stories were about $1 million a day, but these still account for a minuscule percentage of the total ads on the site. The goal is to increase the share of such ads and those which appear as part of News Feeds, Chief Operating Officer Sheryl Sandberg said.
Ads on mobiles showed a higher response from users according to a study by TBG Digital, followed by those in News Feeds, Sponsored Stories and the least response was from traditional ads.
Advertisers are now looking to see whether the clicks on their ads are actually translating into business for them. This is the area that Facebook plans to address and set in place a tracking mechanism to monitor the Return on Investment of ad campaigns. This information may be shared with advertisers so that they can optimally use the Facebook platform to sell their products, while the network itself will gain from this value-added analysis.
Apart from big businesses, Facebook is also targeting small and local businesses which constitute a loyal and sticky revenue source. Facebook has made it easier for such firms to launch ads directly from their Timelines with just a few clicks.