Your own branded online community vs advertising on Facebook

Advertising Age has today reported on an interview with Mike Murphy, VP-media sales at Facebook. Mike is talking about their newest mechanism for brands to connect to Facebook users.

An aside:
Some people have a go at Facebook for trying so many different ad models. I certainly don’t hold this against them. Right now, they:

  1. have advertisers reporting poor returns when using current Facebook ad services
  2. are burning cash at a rate of around $150M this year to keep the party going
  3. are in a social networking marketplace which is changing very quickly, for which no one has yet figured out the best way to sell users or their eyeballs to advertisers

As a result they need to innovate FAST. Throwing mud at the wall is not the most elegant solution (and as seen with Beacon, it can be dangerous) but it’s a perfectly credible strategy in Web2.0 world where users and advertisers are prepared to try out new things.

Now back to Mike Murphy. So apparently he’s said Facebook is attempting to solve the demand-creation side (i.e. “this is HOT, get one”) of the online advertising equation as opposed to the demand-fulfilment side (i.e. search ads and text links). So that means Facebook hopes to be great at getting you to want a Nike track top because your friend just bought one, commented on one or became a “friend of Nike”. I can totally see how Facebook is well suited to this and why it can work. It’s ironic that a company leading an online revolution is reverting to old-style PUSH advertising: “getting people to buy things they don’t need with money they don’t have” but he makes a good point, saying: “the web as a whole hasn’t done a good job creating value on the demand-generation side,”

Facebook has no choice but to veer in this direction because it is a pure social network. Users visit to chat with friends and extend their off-line social lives. Users do not spend time on Facebook when they are tying to decide what car to buy or which hotel to stay at. And that’s exactly why Facebook adverts tend to get poor response and clickthroughs.

It’s a great shame for Facebook and marketeers alike that the site is not a good platform for supporting demand-fulfilment. But that’s because people are simply in a different mindset when looking for something they know they want vs chatting to friends about who they hooked up with last night. Jeremiah Owyang makes this point here using some research from Forester.

This debate goes to the heart of why we, at FreshNetworks, often advocate branded online communities over Facebook advertising campaigns. An online community is not the same as a social network and people do visit online communities when in the demand-fulfilment mind-set. For example they visit Amazon to read book reviews, Tripadvisor to read hotel reviews and thousands of other communities where comments have been posted on every product from nail clippers to luxury yachts.

Demand-creation is very important for growing any business. I do hope that Facebook’s new propositions successfully help marketeers achieve it. I am sure they will. However FriendFeed and Open Social will in time provide a replication of the benefits of this new Facebook model across a broader audience. As a result, it is far better for brands to focus on an online community that can provide the basis for both demand-fulfilment and demand-creation activities. For me that’s why a branded online community beats a Facebook advertising campaign in the majority of cases.