Facebook, the booming social network company, is quietly creating a technology that would let advertisers target Facebook users based on the “massive amounts of information people reveal” about themselves, according to a story in today’s WSJ.
The new ad plan, reportedly being led by Matt Cohler (pictured top), vice president of strategy and business operations, and Chamath Palihapitiya (pictured below), vice president of product marketing and operations, may produce some serious concerns among some of Facebook’s partners.
Advertisers placing ads on your profile page will have access not only to your age, gender and location, as they do now, but also on details such as favorite activities and preferred music, according to the piece. They wouldn’t have access to your name however — and thereby have no way to target you as as an individual. Rather, Facebook would let advertisers target groups with similar characteristics.
But the biggest bombshell of the piece is this line: “In addition, the ads would show up on Facebook pages that feature services provided by other companies, one person says.” If true, this suggests Facebook wants to advertise on pages controlled by third-party developers on Facebook’s “platform.” 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.
A Facebook spokesperson declined to comment for the article. Worth noting is that numerous companies have launched their own ad networks to run on Facebook’s third-party applications (these companies include Lookery, RockYou and VideoEgg). Microsoft, which has a large deal with Facebook to run its own ads, may have its own concerns about the program. The advertising rates advertisers are getting on Facebook is being highly debated. Some reports suggest rates are as high as $10 CPM in some cases. However, a source told us recently that Microsoft is losing money on every ad it serves on Facebook. We ran this by Facebook two weeks ago, but a spokesperson declined to comment on rates, saying only that the relationship with Microsoft was strong. Microsoft recently extended its partnership with Facebook, suggesting things can’t be too bad, or even that Microsoft itself may be in on the ad targeting plan being developed. Again, we don’t know.
Tags: co:Facebook, co:Lookery, co:microsoft, co:RockYou, co:Slide, facebook-advertising8 Comments
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Rex Dixon said:
Thanks for the Lookery mention. It is quite interesting that Facebook is going this route; saw the article on WSJ earlier. Great spin as always Matt!
Rex Dixon
Publisher Relations
Lookery -
ANon said:
you are worthless. first of all, facebook already has ads in the newsfeed, which is what the wsj article suggests. big deal. some reporting to repeat a meme that’s moronic in the first place.
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Jitendra said:
This is very interesting…What Facebook is developing could be the most sophisticated ad targeting system based on user activities etc. rather then users visiting sites as is the care right now.
They could also potentially extent the service to get into AdSense kind of model by tracking facebook users across the internet on even small site…
Interesting although not entirely unexpected development.
-Jitendra
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saar gur said:
Publishers generally want the highest eCPM from an ad network and Facebook is best positioned to deliver the highest eCPMs within this environment. This should not be a surprise to anyone.
If facebook has (a) the richest data set about its users with decent optimization technology and (b) a great salesforce focused on selling ads to this specific demographic, it should be able to drive the highest eCPM on all of its pages (including third party application pages).
If you are a facebook application developer and you decide to use a different ad network, you will probably have less reveneue (a lower eCPM).
Until Facebook can deliver this product/ecpm, it would be pretty sweet if Facebook could offer its guaranteed MSN CPM rates to its third-party developers…
:-) -
Lee Lorenzen said:
Matt,
Facebook has clearly said that app developers get to keep 100% of the ad revenue on their “canvas pages” which are a subset of the overall facebook user interface. Facebook reserves the top, left and bottom areas of the screen for their own UI elements and ads.
The key for developers is that they should rent their ad real estate out rather than sell their applications too early for sub $1.00 per user rates. For those who want the full story on why users are worth from $1 to $10 dollars to developers please see:
http://www.facebook.com/topic.php?uid=2392191727&topic=2824
WRT your comment about Microsoft losing money on their ad deal with Facebook, this makes no sense and you can read about why in the full story on why Facebook is worth $100 billion (i.e., $500 per user x 200 million users in Dec. 2008) which is explained in the post in my Official Altura Ventures and AppFactory Facebook Investment Fund Group:
http://www.facebook.com/topic.php?uid=2392191727&topic=2793
Thanks,
Lee Lorenzen -
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