Facebook is set to "unveil a new way of advertising online", according to an invitation sent out to advertising agencies in New York, reports AdAge.com.
Facebook founder and CEO, Mark Zuckerberg and other members of the executive team will be present at the Novemeber 6th event, and while its not known exactly what will be presented, AdAge claims to have some insider knowledge:
... ad-industry executives familiar with the company's plans said the social network is looking to better use the data its users voluntarily offer up on their profiles. Of course, that much seems like a no-brainer (although it's actually not easy to implement). But less obviously, a couple of industry executives familiar with the company's plans suggest Facebook could use some of what it knows about people -- and their relationships with others on the site, what is known as the "social graph" -- to target them off Facebook as well.
The article also makes reference to a recent trademark filing by Facebook for what is described as a "SocialAd".
... advertising and information distribution services, namely, providing advertising space via the global computer network [and] promoting the goods and services of others over the internet.
How Facebook's ad system will be able to target users away from the social networking site is unclear, and as much as I've racked by brain over this one, I'm none the wiser. For one thing, for all of Facebook's so-called "openess", it's an incredibly inward looking system. User data can flow into the site, via third-party apps, but it rarely goes the other way. For a "SocialAd" system to work beyond Facebook alone, would require some kind of user tracking beyond the Facebook.com domain itself, or alternatively to create ways for Facebook data - through a widget or toolbar of sorts? - to live outside the site.
Having said that, it's certainly true that Facebook knows a hell of lot about its users through the information that we volunteer onto our profiles (date of birth, job, education etc.), as well as our likes and dislikes. Interestingly, we've also volunteered a lot of extra data through the third-party apps we've installed. Off the top of my head, I've installed Facebook apps which reveal my favorite
football soccer team, and political bias. Although, as AdAge points out, it's quite a challenge to create an automated system which can mine this data efficiently to target ads.
Were Facebook to roll out such a system (or rather when), where does this leave their current ad partner, Microsoft?
As Valleywag notes:
It's widely thought that Microsoft bought up all of Facebook's U.S. banner-ad inventory through 2011. That's not entirely true: Facebook actually reserved a small percentage of its domestic ad space for direct selling. It wants to gain more control over its U.S. inventory, though.
So Facebook has a small reserve on ad space, for which it can experiment on. And the Microsoft deal will expire in 2011, if not sooner at Facebook's request. That explains the current bidding war between Microsoft and Google over a 5-10% stake in Facebook. If only to secure a future ad-partnership.
However, if Facebook can create an ad targeting system to rival Google's AdWords, and somehow gets its system to point outwards, why would it need Microsoft or Google as a partner?
On the other hand they are pretty big ifs.