Facebook, Visa Aim to Rope In Ads With SMB Network

As part of a small-business network Visa designed for Facebook, the world's largest credit and debit card processor is paying for US$2 million of advertising on the socializing site. Visa also will promote the new Facebook service in a multimedia marketing campaign beginning next month.

Visa is giving a $100 advertising credit on Facebook to each of the first 20,000 U.S. businesses that download the Web application needed to join the network, which debuts Tuesday. About 80,000 small businesses already have profiles on Facebook.

Catching Customers

Visa's service is designed to provide small-business owners with tools and tips on attracting new customers, trimming costs and other ways to make more money. Businesses that belong to the Visa network on Facebook also will be able to communicate with each other to share ideas or even negotiate deals.

Internet search leader Google (Nasdaq: GOOG) is providing some of the features on Visa's business network, including maps, calendars, word processing and a new template for creating expense sheets and business cards. And The Wall Street Journal and Entrepreneur magazine will contribute articles addressing questions posed by businesses that belong to Visa's Facebook network.

Where's the Money?

Visa's program will be one of more than 24,000 applications that have been built during the past 13 months by developers who want to reach Facebook's rapidly growing audience. Most of the programs are for fun, offering ways for Facebook's 80 million users to play games, share photos, rate music and track their friends' activities.

But while the array of applications have helped make Facebook even more popular, few programs are producing revenue for the site, and Facebook still hasn't proven that its social playground is an effective advertising forum.

Finding the right advertising approach also has been a challenge for other social hangouts like News Corp.'s MySpace . Even Google, which runs the Internet's most lucrative ad system, has had trouble marketing on social networks.

User Information

In theory, the information that Facebook has amassed about the demographics and personal interests of its users should make it easier to target certain ads to certain people. But some advertisers fret that Facebook's audience will resent commercials amid all the site's frivolity. Others are leery about their brands showing up on Web pages featuring racy or unsavory content.

Visa's service could turn into a financial catalyst for Facebook if the businesses receiving the ad credits are impressed enough with the results to continue marketing on the site.

"That's what we certainly are hoping for," said Dan Rose, Facebook's vice president of business development.

Visa knows a thing or two about marketing, having devoted decades to building one of the world's best-known brands. The company spent $581 million on advertising and other promotions last year.