Breaking: Federated Media Expands Into Facebook
Federated Media Publishing has announced their expansion into Facebook through partnerships with the owners of the Grafitti application and Watercooler. The initial sponsors launching on Facebook are Hewlett-Packard and Wacom.
Context & Ripple Effects
Federated Media Publishing made its name selling sponsorships across independent blog networks, and this move ports that playbook onto Facebook: instead of buying ads directly from Facebook, it has partnered with the owners of the Graffiti application and Watercooler to place branded sponsorships inside third-party applications, with Hewlett-Packard and Wacom launching as the initial sponsors. The deal treats Facebook's application ecosystem as sellable media inventory, much as FM treated blogs.
The timing is awkward by design or accident: it lands days into the confirmed backlash over Facebook's Beacon program, which drew harsh criticism over privacy and misrepresentation of how user data was exposed, forcing Facebook to acknowledge complaints. It also lands two months after paidContent.org's What If Facebook Taketh Away? posed the open question of whether any third party can build a durable business on Facebook's goodwill — a question that now applies to FM's own expansion.
First-order effects
- Hewlett-Packard and Wacom gain early sponsorship placements inside popular Facebook applications without negotiating directly with Facebook itself, while the Graffiti and Watercooler owners get a monetization channel for app inventory that otherwise had no clear buyer.
- Federated Media extends its aggregation-and-sponsorship sales model from blogs into social-application inventory, adding Facebook apps as a new category it can pitch to its existing advertiser base.
Second-order effects
- Other ad networks and rep firms face pressure to strike similar deals with Facebook application developers, since brands now have a proven route to social-app audiences that bypasses Facebook's own sales operation.
- Application developers gain a competing bidder for their ad space beyond whatever Facebook offers directly, shifting some pricing leverage toward the developers and whoever aggregates them.
Third-order effects
- If sponsored-app placements perform where Beacon stumbled, social-platform advertising could consolidate around intermediary networks that aggregate developer inventory — but the September question of whether Facebook tolerates durable third-party businesses on its platform still hangs over every player in that chain.
- The pattern points toward platforms functioning as distribution rails with an entire ecosystem of ad middlemen built on top, whose viability depends entirely on platform policy the middlemen do not control.
The trend: Brand advertising is moving onto social-network applications through intermediary networks that aggregate developer inventory, testing whether ad businesses can be durably built on rented platform land.