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Facebook treads fine line with advertisers

Tension is growing between Facebook and its advertisers, as they clamour for more access to its data, and the social network continues to hold back.

As the company juggles the competing needs to protect the information of its users while exploiting its moneymaking potential, it is hunting for creative ways to use the data it has without handing it over directly to advertisers.

"They're in a tough spot," said Brian Wallace, vice-president of strategic marketing at Samsung Mobile USA. "They're managing lots of privacy and security concerns, and we're just saying 'gimme, gimme, gimme'. So it's going to take time."

As pressure mounts for the now publicly listed company to keep growing its revenues, Facebook is fighting to keep its top customers satisfied, and prevent defections like that of General Motors, which pulled its paid advertising from the site in May.

"We know we have to become easier to work with," said Carolyn Everson, vice-president of global marketing for Facebook. Facebook is developing tangible guidelines for marketers, Ms Everson said, and devoting Facebook staff to work closely with select advertisers.

Some of them, like Samsung Mobile USA, are recognising that they need to play by Facebook's rules if they want to make the most of the site.

"If they're not going to give me the data, they should at least understand my business objectives," he said.

Facebook responded to the call, dedicating a team of employees to manage Samsung Mobile USA's account and to help craft a uniquecampaign for the US launch of its Galaxy S III smartphone at the end of June.

Facebook started with its mobile user data, sending ads custom tailored to iPhone users, BlackBerry users, and Android users, each with a different message urging them to switch to the new Galaxy phone.

Samsung Mobile USA also tapped into the Facebook data from the five wireless companies that had agreed to carry the phone, using customer posts from Verizon and AT&T Facebook pages to promote deals to Samsung fans.

Finally, Facebook offered Samsung Mobile USA the first-ever opportunity to "take over" Facebook's log out page. For three days, whenever any Facebook user logged out of his or her account, that person saw an ad for the Galaxy S III. In total, 70m people saw the ad.

People who saw the targeted ads, about 65m, were twice as likely to engage with them. Overall, Mr Wallace was very pleased.

"That says their data are effective," he said. "This is something we're going to do a lot more of."

What Mr Wallace liked even more than the attention he got from Facebook, and the results, was the size of the price tag.

"You'd be surprised how much it isn't," he said, declining to name the exact cost.

In fact, the aspect of Facebook that Mr Wallace finds the most valuable is the part he pays nothing for. More than paid advertising for product launches, Mr Wallace has come to rely on Samsung Mobile USA's free Facebook fan page for managing customer relations, loyalty, and retention, raising questions as to whether Facebook can, or will, find a way to eventually charge for those features. For now, Facebook says the parts of the site it does not charge for are closely tied to the parts it does charge for, in part because the free sections generate the data that inform the paid advertising. But first, Facebook must build more success stories like Samsung's before it can command a higher premium for its advertising services.

"It's less about the financial commitment than it's about having an incredibly savvy marketer who understands the power of all these things together," Ms Everson said. "The more that people start to see the power of what can be done, specifically around product launches, I think you'll start to see a better playbook behind all this."

(Additional reporting by Arash Massoudi)

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