New Facebook Ads May Make Money, Upset Users

    August 23, 2007

Even as credible rumors of acquisitions and IPOs spread, many onlookers were astonished by the amount of money Facebook seemed to believe its site was worth.  Yet Facebook may now introduce an advertising system that would have doubters nodding in agreement.

As reported by the Wall Street Journal’s Vauhini Vara, Facebook “would let marketers target users with ads based on the massive amounts of information people reveal on the site about themselves.”  This could lead to some ultra-accurate ads, and even, perhaps, to some conversions.  It could also anger users who believed their privacy had been violated.

In another questionable move, the ads “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.”  Remember the uproar when Facebook introduced those feeds?  Filling them with ads probably isn’t the best way to make users happy.

Nonetheless, targeted ads on social networks could be the next big thing.  AllFacebook’s Nick O’Neill reasons, “Just as Yahoo was forced to build their moderately successful Panama system when Google AdWords began to crush them in ad revenue; other social networks will be forced to open their platforms and create ad networks just as Facebook has.”

Look for Facebook to launch “a basic version of the service late this fall,” according to the WSJ.