Facebook unveils targeted ad system

According to this statement, Facebook Ads now makes it possible for “businesses to connect with users and target advertising to the exact audiences they want.” Some of the companies already on board include Sony Pictures, The Coca-Cola Company, Microsoft, Verizon Wireless and BlockBusters.

Essentially, this is a very logical step for Facebook, and one that makes a lot of sense for advertisers. Think about it. Social networking sites have access to an almost unlimited amount of data about users. This includes their interests, friends, demographics, favourite on-site applications and groups, to name just some. Arguably there isn't a better way for advertisers to reach their target audiences with advertising that speaks to users on a very individual basis.

Tapping into word of mouth

One of the underlying strategies that Mark Zuckerberg is tapping into though is word of mouth. If we refer just to Nielsen's most recent consumer survey, we see that word of mouth is indeed the most trusted form of marketing, and what better way of tapping into this than using networks of trusted communities. When we overlay this with surveys such as Prospero Technologies', which reported that 88% of businesses are expected to increase their social media spend in 2008, we can see that from a business prospective, Facebook is right on the money. As was Microsoft with its recent 1.6% buy-in.

So what exactly can marketers do on Facebook? One example is the creation of branded profile pages, called Facebook Pages, which is something that MySpace has done for quite some time now. Companies can add photos, videos, music and even add third-party Facebook Platform applications (such as ordering tools) to their profiles. However, Facebook takes this one step further by tapping users' brand activity with the whole newsfeed feature that all Facebook users use to keep up-to-date with friends and groups. And that's just the beginning.

You see, Facebook's new advertising system is not just limited to on-site advertising activity only. Facebook also launched something called Facebook Beacon, which makes it possible for users to share information from other participating websites with their Facebook friends. And if that weren't enough, there's of course also Facebook Social Ads, which gives Facebook the ability to target advertising to users using, as I pointed out above, users' profiles and on-site activity as the backbone.

Main competitor

Facebook's main competitor, MySpace, also recently showcased a new advertising system, in essence allows advertisers to deliver banner ads that are based on users' profiles, users' on-site activity, and even users' communications with friends. What's interesting to note is that, as Nick Carr writes, Facebook used to distinguish itself as the anti-MySpace. Today, it's determined to out-MySpace.

As far as I can see, Facebook is embracing a theme of Seth Godin's book All Marketers are Liars; that the public perceives marketers' messages as “fairy tales” and that mass marketing has shifted to word of mouth. What Facebook has done, aside from going head-to-head with Google and MySpace for the online ad industry using its abundance of user information, is empower its users to be a part of the advertising process.

Which brings us to something worth consideration, as Search Engine Land rightfully suggests. Ever since Facebook Platform, which was released in May 2007, Facebook has become a platform for network-pushed application promotion, which for some is perceived as spam. What one fears is that Facebook Ads could make this even more intense, especially if users feel they're being taken advantage of.

For more information, check out TechCrunch's post, which was written live from Facebook's announcement on Tuesday 6 November.