Published in August 27th, 2007
Social-networking site Facebook is ramping up efforts on a major new advertising plan that would let marketers tailor ads for the millions of Facebook customers who provide a mountain of information about themselves on the site, according to major advertisers and analysts briefed on the system.
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But the potential volume of ads, and their proximity to the personal content of customers, could stir privacy concerns, say tech and advertising analysts.
Facebook's new format may display more prominent ads on the news feed - a list of updates on the activities of a user's Facebook friends, according to those briefed on the new system. Facebook ads also currently appear as banners on the left-hand and bottom borders of Facebook pages.
Eventually, Facebook hopes to refine the system to deliver ads based on users' interests, says Debra Aho Williamson, senior analyst at market researcher eMarketer.
Facebook acknowledged that it is working on its advertising strategy but declined specific comment.
"Facebook wants to combine information points about you as a person, and your network of friends, to create a more complete profile of you as a consumer," says Paul Gillin, author of The New Influencers: Marketer's Guide to New Social Media.
"If you join a photography group, for instance, they can then target camera ads to you," he says. "This drives even more value out of its database."
Facebook has grown at such a furious clip - it's up to 37 million active members after it was made available to everyone last September - it's considered prime online real estate for targeted ads.
The company is on track for $125 million in U.S. ad revenue this year but could add millions in additional sales through its new ad plan, Williamson says.
"Facebook sees as much potential in sales via social networking as Google has through Web searches," Gillin says.
MySpace (NWS), the largest social-network, with 115 million users, is implementing a new targeted-ad system this year, company spokeswoman Ann Burkart says.
"The same ultimate goal applies to social networks," says Williamson at eMarketer. "It's about mining the information people post about themselves and using it for targeted advertising."
General Motors (GM) and Pepsi (PEP) are among companies that have been briefed.
"The opportunity to target: That's what we're here for," says John Vail, director of interactive-marketing at Pepsi, a Facebook advertiser since last fall.
But the lure of a financial haul from advertisers must be weighed against privacy concerns of Facebook members, who use it as a personalized scrap book to socialize with friends and colleagues.
Facebook must be sensitive to the "creepiness factor" of potentially intrusive ads, Gillin and others say. Google (GOOG), for instance, experienced customer backlash when targeted ads first appeared on Gmail, its free e-mail service.
Google's customers eventually got used to the ads as online users have in general become more at ease with privacy issues.
Facebook users grumbled about privacy when the news feed was introduced in September 2006, "but they quickly got over it," Williamson says.
