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'Wiki-Facebook' Launches & Facebook Ads Work

Ahead of Facebook's developer conference the social media behemoth announced some new features designed not for developers, but for users, to get them to engage even more with the site by expanding connections beyond friends.

Also today Nielsen and Facebook released their first in-depth joint study, finding that ads in a social context are more effective than display ads in a non-social format. These two points may be separate, but they are certainly relevant to each other.

The more time people spend on Facebook connecting not just to friends but also to topics, the more opportunities Facebook has to place these targeted ads that work.

Facebook is designed for people to connect with friends or brands, but now it's trying to get users to connect in that same way, but to ideas, concepts, places, and hobbies. "Community Pages" are for topics or experiences—Facebook uses cooking as an example. Users can add to a page, connecting with people who they may not be friends with, and say, sharing recipes.

From hometown, to alma matter, to employer, Facebook users already link to a lot of these topics. But now if you click on "Omaha, Nebraska" as someone's home town, it'll take you to a community page about that site.

This congregation around locations or ideas seems like a natural fit for targeted ads. People on a cooking community page could find ads for Bon Appetit magazine or a sale for Pots & Pans. A restaurant chain in Omaha might target ads to people on the city's community page.

Today Nielsen released its report "Advertising Effectiveness: Understanding the Value of a Social Media Impression," following six months of research with Facebook.

The results are pretty good endorsement for spending on Facebook ads. Ads that include social context, like endorsements from friends, increase ad recall by 1.6 times and brand awareness by 2 times, and grow consumers' intent to purchase a product.

It's worth it for companies to maintain a vibrant Facebook page —the more fans companies attract, the higher the chances that they'll be able to achieve that powerful "social context" for their message.

It's still early days for social media advertising, especially as Facebook expands into new arenas with these community pages. The challenge seems getting consumers to endorse brands or share ads, to create that 'social context' that is so convincing, and so hard to fake.

Questions? Comments? MediaMoney@cnbc.com

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