Facebook Begins Testing Sponsored Results, Its First Search Typeahead Ads

Heads up, Google. Facebook is testing a new format of search ads called Sponsored Results that lets advertisers show ads in the Facebook search typeahead to users looking for a particular Page, app, or Place. It basically will let businesses divert traffic from each other. For example, a competing game company could target Zynga’s CityVille so anyone searching for “CityVille” would see an ad leading to their game alongside the organic search result leading to Zynga’s game.

The Sponsored Results will look just like organic results except for being marked with a tiny word “Sponsored”. Facebook tells me they’ll be sold on a cost per click basis, can be targeted to people searching for any Page, app, Place, (and possibly event) without that business’ permission, and the tests begin tonight.

Sponsored Results are not keyword ads. Advertisers can’t target something broad like “beach”, “games”, or “cameras”. They have to target a specific entity on Facebook, similar to how brands can currently target users with sidebar and Sponsored Story ads based on a user’s interests. For example, Sponsored Results could be targeted to people searching for “Sandals Resort Hawaii”, “CityVille”, or “Nikon Camera”.

The Sponsored Results will not appear on the full Facebook Search results page, only in the typeahead. Facebook struck a deal years ago with Microsoft to let it place ads at the bottom of the search results page, but now Facebook is taking control and offering a fully-owned platform for search ads.

This new ad format can only direct users to on-Facebook properties, but that includes an on-Page application or a specific Page post. That could let advertisers send users to a Facebook Offer coupon they’re distributing, a contest app they’ve launched, or an email or phone number sign-up widget. It could also help brands team up, to run ads point traffic from people searching for them to a joint promotion run with another business they’re partnering with.

Advertisers can target multiple entities that people are searching for at a time. They can also layer on Facebook’s other ads targeting criteria so a news website targeting Sponsored Results to people searching for the “CNN” Page could refine their ads to only be shown to 30-50 year old women in San Francisco who Like Barack Obama.

Advertising To People Ready To Buy

Sponsored Results will appeal to a class of advertisers Facebook doesn’t serve well right now — direct marketers with products to sell online or games to gain traction for. Until now, Facebook was better for less urgent brand advertising because it didn’t offer many ways to reach users after they’ve shown purchase intent — when potential return on investment is highest and most easily measured.

Sponsored Results, as well the recently announced but just starting to roll out Facebook Exchange cookie-based retargeted ads, could let Facebook compete with Google sponsored search results and offsite ad networks for dollars.

The ads have the potential to reduce the relevance of results in Facebook’s search typeahead, similar to how Google Sponsored Results ads push down organic results a searcher might actually be looking for. Facebook tells me it will be watching for feedback, though, and stresses that this is just an early test. It’s also difficult to gauge the total presence of these ads, as Facebook doesn’t share the volume of on-site searches users run.

If rolled out, Sponsored Results could open up a huge new revenue stream for Facebook, and make its currently slumping stock price look like more of a bargain. Sponsored Results won’t have generated any significant revenue that impact Facebook’s first earnings report since becoming a public company though, which TechCrunch will be thoroughly covering on July 26th.