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Facebook Changes Ad Strategy to Woo Madison Avenue

Thursday, 6 Jun 2013 | 4:40 PM ET
Mark Zuckerberg
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Mark Zuckerberg

Facebook realizes it has a Madison Avenue problem: It has too many ad programs, and they're complicated and confusing, which discourages ad buyers from spending.

But the social-media giant is trying to fix that: At an event Thursday at its headquarters in Menlo, Calif., the company explained to journalists and ad buyers its plan to win back Madison Avenue.

Facebook said its plans to move away from showcasing all of its ad products to instead offer more solution-oriented programs. It says it will begin helping brands do specific things: drive in-store sales, generate online conversations, drive app downloads, and improve brand awareness. (Facebook posted this "Update on Facebook Ads" on its blog.)

"Even though every product is really good on its own, the whole is less than the sum of all parts. It should be simpler," said Fidji Simo, Facebook's product manager for ads. "What we want to do is take the guesswork out of the process."

And with this new solution-oriented approach, Facebook is slashing the 27 ad products it offers to just six or seven over the next six months. The company said it isn't eliminating any ad functionality -- just redundancies -- by sticking with the ad options marketers have found easiest to use.

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Facebook said it will also now automatically make all of its ads social—if an advertiser qualifies. Until now, advertisers had to purchase both sponsored stories and ads. Now when a marketer creates an ad for the news feed, Facebook will automatically tell targeted consumers if their Facebook friends "like" the brand and whether they've clicked on it.

Of course, behind these changes is a push to drive ad revenue higher. Facebook's Simo said this consistency will "make it a lot easier for advertisers to actually set up their campaigns." With Wall Street wanting to see revenue growth continue to accelerate, getting Madison Avenue to spend more money on Facebook is key.

Harriet Taylor contributed to this report.

—By CNBC's Julia Boorstin. Follow her on Twitter: @JBoorstin

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.