Why ad budgets are better spent on Facebook apps then Facebook itself
When a Facebook user adds "skiing" to the interests on their profile, it's hard for an advertiser to tell exactly what the user means. A Google search for "Ski rentals in Wolf Creek, Colorado" is much more informative, by contrast. Advertisers know what kind of pitch to deliver, albeit in the form of an AdWords haiku. Inside Facebook's Justin Smith argues advertisers have an easier time targeting users of Facebook apps — for example, one who installs a skiing weather-map application, and looks up conditions in Wolf Creek. It's one reason he says that Facebook applications will prove easier to profit from than Facebook itself.
His other argument is that sponsored applications, such as Federated Media's BMW "What Drives You?" campaign, can provide — take a deep breath — "more directly aligned and integrated brand experiences" than Facebook's own Pages product, which maybe lets users post some video if they like.
Smith is preaching to the choir. His readers are mostly hopeful developers who have already bought into Facebook CEO Mark Zuckerberg's promise of an ecosystem on the Facebook platform, so we're sure his optimism is appreciated. The problem with Smith's theory is that for apps to take advantage of user intent, they need to offer actual services in specific areas like travel, finance and shopping. So far, all most of these optimistic developers have built are apps intended to provide a pixelated picture of "fun," or prey on adolescent insecurities.