How Facebook search ads change the competitive landscape for businesses

For years of search marketing, companies have had to bid on their own keywords to protect their brand and avoid losing traffic to competitors. Now they’ll probably have to do it for Facebook, too.

Facebook announced its plans to offer search-based advertisements called Sponsored Results last month and recently we’ve seen a number of examples from, EA and Kixeye. It seems that if Sponsored Results comes out of beta and expands to more advertisers, the competitive landscape of the social network may increase to the point that businesses will have to pay for these ads just to ensure they aren’t being overshadowed by competitors. In the process, Facebook can collect more revenue than ever.

[Update: 8/22/12 – Facebook has now made Sponsored Results available via the API and Power Editor.]

Take what’s going on during the beta as an example. We’ve seen game developers EA and Kixeye both bidding on Zynga games, which means that when users search for Farmville, they see results for EA and Kixeye games first. Even worse for Zynga, when users search for the developer’s CityVille game and hit enter — as frequent players are likely to do out of habit — they might end up in EA’s SimCity Social. That’s because Sponsored Results often appear above organic results, and hitting the enter key takes users to whatever appears first in the typeahead search window.

The same is happening with bidding against searches for dating app Zoosk. But is even running ads targeting people who search for Pinterest, Instagram, TripAdvisor, Washington Post Social Reader and a number of other top apps on the platform. This type of activity could incentivize a range of developers to run Sponsored Results campaigns purely to protect their position.

We may start see this happen among pages, too. If brands don’t run Sponsored Results for their own page name, someone else probably will, as most companies know from what happens with Google search. It might not be long before Facebook joins AdWords and becomes a part of brands’ “always-on” advertising efforts.

For the past few years companies have gotten into “Like races” with their competitors. One brand would run Facebook ads to boost their Like count and then similar brands would run ads to keep up. But all that was for what was essentially a vanity metric. With Sponsored Results, competitors can actually redirect users to their own pages, so the pressure is even greater to allocate budget for it.

Still, it remains to be seen how effective Sponsored Results will be in driving consumer action, whether it’s using an app, Liking a page or making a purchase. If the ads don’t drive results, few businesses will bother trying to stake their claim or bid against competitors at all.

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