Facebook wants to match ads to your digital DNA

Facebook wants to match ads to your digital DNA

Summary: From the what did you expect department, the Wall Street Journal reports on Facebook developing a targeted ad system, similar to what Google, Yahoo and Microsoft are doing to generate higher pricing and tens of billions in revenue.


From the what did you expect department, the Wall Street Journal reports on Facebook developing a targeted ad system, similar to what Google, Yahoo and Microsoft are doing to generate higher pricing and tens of billions in revenue.

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.

These ads would show up differently than the banner ads and boxed flyers that appear on the borders of Facebook pages, say people familiar with the plan. Instead, they would be interspersed with items on the "news feed," which is a running list of short updates on the activities of a user's Facebook friends. In addition, the ads would show up on Facebook pages that feature services provided by other companies, one person says.

Facebook has enormous amounts of data about individuals, a kind of digital DNA, as well the social graph, to create profiles that advertisers could bid on in an automated system. The information gathered by Facebook is much richer than what Google and others can gather through search. If you thought that Facebook was unwise to sell out to Yahoo or another company for a few billion, think again.

I'm not sure I want Facebook deeply mining my data and providing it anonymized and clustered to advertisers, or super-targeted, contextual ads embedded in my Facebook news feed. I would expect Facebook to be flexible and offer users and opt-out alternative, perhaps a proxy revenue-per-person-per-year fee to avoid getting inundated with "targeted" ads or "recommendations," similar to how Amazon personalizes its service for users but with data from a person's social graph.

Topic: Social Enterprise

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  • More data than Google? Ummmm . . . .

    Just like any mega site Facebook has a ton of info its users. But to compare that with the omnipresence of Google is stretching it. Yes, Google can tell what you're searching for. But it goes well beyond that. Google Analytics, Google AdSense, the Google Toolbar. These are just some of the many ways they can track and aggregate user data (and across a much broader range of Internet activity.) Yahoo's a much more appropriate comparison for Facebook in regard to the types of behavioral data Facebook has on its users (although Yahoo also has a massive pile of search/toolbar data to boot.)

    Speaking from an advertiser's point of view, there's still a MASSIVE difference between contextual and even emerging behavioral platforms like Yahoo's very promising SmartAds platform. Even with improvements in behavioral targeting these formats still just don't perform remotely as well as search - which is basically the ultimate permission-based marketing platform on the web. With search, the user has clearly specified what they're searching for at that EXACT moment in time (not just their overall interests and trends based on historic behavior) and an advertiser can deliver a highly-targeted and relevant message to an audience that's more receptive to that message at that exact moment. To be sure, behaviorly-targeted ads can improve on contextually-targeted ads and take them to the next level. But it's still a more passive form of ad delivery and the potential revenue ceiling is still significantly lower. It just doesn't scale like search and advertisers will prioritize their budgets accordingly.

    That's why I'm still highly dubious of all the current valuation we see in regard to Facebook. The sheer number of users is attractive for sure. And with an excellent behaviorally-targeted platform they'd have the potential to see decent revenue. But it's not going to be anywhere REMOTELY close to the multibillions of dollars per quarter (much less per year) that sites like Google, and even Yahoo, pull down.

    Another thing to keep in mind is this. We've seen all the rumored numbers thrown around for offers to buy Facebook. And the company with by far the deepest pockets (and a current proclivity to spend it) is already serving as Facebook's main source of income and ad delivery - Microsoft. Microsoft's had a nice long peek under the skirt of Facebook and knows its realworld value and potential. And with their acquisition of Aquantive, they're in as good a position as anyone to monetize Facebook's audience. But if the financial potential were as high as the hype would suggest, then Microsoft would be making an offer that would be impossible to refuse (or that would at least make the earlier rumored offers seem like chump change.) Even the rumored $6-billion offer (and the source of that rumor was more dubious analyst speculation than insider info) would be tiny relative to the hype.