Report: Facebook’s ‘Engagement Ads’ to launch

Facebook is making the advertisements on its site “smarter” and more interactive, Forrester Research analyst Jeremiah Owyang wrote on his blog on Thursday. Owyang had been briefed by Facebook monetization director Tim Kendall on the initiative, called “Engagement Ads,” which is slated to launch later on Thursday.

Facebook representatives were not immediately able to provide confirmation or a statement.

The social network has already made it clear that it wants its ads to be more than just display ads. You can give a thumbs up or down to an ad and then tell Facebook why you said so, and its targeted Social Ads are getting deeper: putting “pizza” in your status message can instantly turn up an ad for online ordering company Seamless Web accompanied by a photo of a pizza.

Engagement Ads are different, though, according to Owyang. Members can leave comments on ads that then show up in their friends’ news feeds, sign up as a “fan” of a product through Facebook’s “Pages” feature, and use an ad as a way to send a brand-related virtual gift to a friend (if the brand signs up for this).

“To combat dismal click-through rates of traditional (social network) advertisements, these features emulate widgets and encourage users to increase member adoption, viral growth, and brand interaction,” Owyang explained in his blog post. “Brands will only succeed with these ‘WidgetAds’ if they create content that puts community first, lean on new interactions, integrate with other tools, plan for the long haul, and change how they measure success–traditional Internet advertising tactics won’t apply.”

Facebook’s history with advertising has been spotty at best. Like most social networks, it relies on ad dollars, but its revenues remain low because social sites traditionally don’t attract the click-through rates of, say, search advertising. When it launched its ‘Social Ads’ initiative last November, one major component–the allegedly intrusive “Beacon”–was met with so much negative publicity that Facebook’s executives modified the program and apologized.

But Beacon hasn’t gone away, just last week spurring a class-action lawsuit; while its claims are shaky at best, it does show that audiences don’t necessarily take too kindly to unfamiliar forms of advertising.

This post was updated at 7:48 a.m. PT.