Where did the Facebook ads go?
Developers have been raging about Mark Zuckerberg's redesign of Facebook's user profile pages, at last unveiled today. But advertisers might soon find reason to fuss, too. The new design has no conventional ads — not the banners sold by Microsoft; not the smaller, demographically targeted ads sold by Facebook in its Social Ads program. True, there's some white space on the right where ads might go; but the page's HTML source code doesn't have any hooks for ads in that area. Should advertisers be horrified that Facebook is taking some of its most-viewed inventory — users' profile pages — off the market?
In a word, no. Despite improved targeting, click-through on Facebook ads remains abysmally low, at about 0.045 percent, CPM Advisors reports. The rates on those ads is similarly rock-bottom; Facebook's automated ad-selling systems suggest advertisers bid a CPM, or cost per thousand pageviews, between $0.21 and $0.27.
Most of Facebook's inventory is junk. And Facebook's new design may help take out the trash. It's no surprise users don't click on ads on profile pages; there's too much else to do. The new profile centers on users' news feeds, a constant report of their activity on Facebook — and, increasingly, on other sites across the Web, like Digg and Flickr. (This latter bit, called Facebook Connect, is a reinvention of the troubled Beacon feature, which met a frosty reception last year for being overly invasive of Facebook users' privacy.)
To the extent Facebook users see ads on the new profile pages, it seems likely they'll be disguised as reports about your friends in your news feed. (Did you know your friend went to see that new movie? Maybe you'd like to buy a ticket, too.) Or not: We hear Zuckerberg, who once championed these ads as a once-every-100-years change in media, has now soured on them.
One has to think conventional ads won't disappear entirely from Facebook. The social network has a multiyear agreeement to let Microsoft sell ads on the site, for one; having already renegotiated that deal in the course of getting a $240 million investment, Facebook would be hard-pressed to change it on Microsoft once again.
But make no mistake: Taking banners off users' profiles is a bold bet. The new profile design emphasizes the news feed — and, presumably, the friend-centered ads that appear within it. Those ads are difficult to sell, and difficult to place; they require vastly more computing power than the keyword matching Google has used to make billions of dollars. If Facebook can master this, it might actually be worth $15 billion, or more. If it can't, its value will be much closer to zero. Good luck, Zuck.
Update: The ads are back — but the mystery over their disappearance remains.