Facebook’s New Profile-Targeted Ad System
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Written By Mohammad Usman | August 23, 2007 | Share This
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The Wall Street Journal reports that Facebook is planning to create an advanced personalized advertising system. The WSJ explains,
“The new service would let advertisers visit a Web site to choose a much wider array of characteristics for the users who should see their ads — based not only on age, gender and location, but also on details such as favorite activities and preferred music, people familiar with the matter say. Facebook would use its technology to point the ads to the selected groups of people without exposing their personal information to the advertisers.”
Unlike Facebook’s typical banner advertising, the new ads will be interspersed within items on the “news feed”– a running list of short updates on the activities of a user’s networked friends. The ads will also show up on pages that feature services provided by other companies.
As VentureBeat points out, this could potentially create revenue-share issues. Matt Marshall writes,
“This could be a slap in the face to those parties because Facebook had previously said it would let them make money by running their own advertisements. However, the sourcing and wording of the article on this matter is vague. It’s quite possible that Facebook may let third-parties access the technology, and agree to some sort of revenue share, letting all parties win. It’s all speculation at this point.”
Because the it will target based on user’s expressed preferences and profile information, the ads raise further questions about user privacy. Though Facebook will keep names anonymous, the idea of having one’s information sold for targeted advertising isn’t likely to draw many fans. Facebook has indicated that it plans to protect privacy by allowing users to set varying degrees of profile visibility.
Despite concerns from 3rd-party developers and users, the profile-targeted ads are expected to bring in significant revenue. As the Times Online calls it, Facebook is opening “a goldmine of data to advertisers.” Said “goldmine” will undoubtedly not only drive up the already high CPM cost of sponsored news feed ads, it will generate (theoretically) a higher number of click-thrus. Facebook, which claims to be valued at 10 billion dollars, desperately needs to generate this type of visible revenue to justify it’s high self-valuation. Given the company’s ambitions to go public, the success of this project is paramount.
According to the WSJ, Facebook has thus far declined to comment.
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