Google Inc (NASDAQ:GOOG) is joining other social networks like Facebook and Twitter in enhancing online advertising features on its Google+ network. The company revealed this week that it has entered the testing phase for +Post ads. These new ads will enable marketers to convert the content they have created and posted on Google+. Citi analysts Mark May, Kevin Allen and Nathaniel Brogadir report that this allows them to distribute the content “as a socially-enabled ad unit” across the roughly 2 million sites which belong to the Google Display Network.
Google beta tests +Post ads
At this point only a handful of advertisers are running these new ads on Google Inc (NASDAQ:GOOG). Cadbury, Ritz crackers and Toyota Motor Corp (ADR) (NYSE:TM) (TYO:7203) are among those trying them out. Users who see the ads can click on it to expand it and see all of the user commands and social options for the ad. For example, they can click to join a live Hangout hosted by the marketer.
Citi analysts say this is important because these types of ads usually push more engagement with the target audience when compared to average ads. They report that social ads like these have already been shown to outperform non-social ads. Here’s a look at a breakdown of their findings regarding social and other types of online ads.
According to Google Inc (NASDAQ:GOOG) +Post ads are already seeing 50% higher expansion rates than the average rich media ad within the industry. As you can see from the above chart, Facebook Inc (NASDAQ:FB) has also seen significant outperformance from ads with some kind of social context. Citi analysts name Sponsored Listings as one example of this on Facebook’s network.
They report that social ads on Facebook outperform non-social ones by two to three times for user and brand engagement.
What Google’s +Post launch means for the industry
The Citi analysts see Google Inc (NASDAQ:GOOG)’s +Post ads as being important because it could signify a shift from the currently dominant cookie-based ads to social-based ads. The early data points already discussed could improve the effectiveness of online ads, thus providing marketers with better conversion rates and return on investment. As a result, Google, Facebook Inc (NASDAQ:FB) and other online advertising companies could see higher cost per impression, thus impacting their bottom lines.
They also believe these +Post ads are similar to what Facebook could eventually launch. In fact, they think the launch of Google’s new ads suggests that Facebook could be very close to launching a third-party advertising network. The analysts see two main assets being leveraged by Facebook Inc (NASDAQ:FB) as it launches and competes in the ad network space. Those two assets are the Atlas ad serving business the social network bought from Microsoft Corporation (NASDAQ:MSFT) earlier this year and Facebook’s social plug-in / log-in feature, along with the thousands of apps and websites which use it.
