MySpace, Facebook Expand Targeted Ads

Marketers Tap Into Web's Social Networks

MySpace yesterday expanded options for advertisers to target consumers based on the information they provide in their social-networking profiles.

The company, which operates the largest site for meeting and sharing photos and other information with friends, also announced a new way for small businesses and individual users to create and place their own ads targeting potential customers by their stated interest and geographic location.

MySpace's announcement comes as companies are trying to use the popularity of online social networks to better collect personal information and aim ads at potential consumers. Social networks are considered ideal for marketers, some analysts say, because users volunteer personal information, such as hobbies and school affiliations.

"We are seeing more confidence from advertisers that they are indeed reaching the audience they want to reach," Arnie Gullov-Singh, vice president of product management for Fox Interactive Media and MySpace, said in an interview.

Meanwhile, the second-largest social-networking site, Facebook, is expected to announce an even broader expansion of its advertising system today at a New York online advertising conference called ad:tech.

Facebook's new system, called SocialAds, will track information users list on their profile pages along with the Web sites they visit, according to a person familiar with it. This combined data will be used to deliver ads that are tailored to individual users' interests.

Facebook did not return calls seeking comment on the announcement.

Converting users into paying customers remains difficult, even if advertisers know all about their interests, because visitors are typically not in a mood to shop when they come to social networking sites, analysts say.

"When people are communicating, hanging out with friends online, it's not necessarily the most welcoming state for marketing. Then it's more of an interruption," said David Hallerman, an analyst at eMarketer.

Web surfers are most receptive to ads when they are conducting searches or consuming content, such as a news story or a YouTube video, he said, because ads are often a source of information about a specific product.

Advertising companies have also struggled to turn Internet users into buyers.

"People can wax philosophically about all the cool things you can do when you have all this data," said Dennis Yu, the "analytics guru" at online advertising company SocialMedia. "But what will a teenager actually pull out a credit card for? And when? At the end of the line, someone's got to buy something -- otherwise all that targeted advertising's useless."

One of the ripest commercial opportunities on Facebook could be its news-feed feature. That feature notifies friends of users' moods, changes in their relationship status or their whereabouts. Soon, these may include alerts about a book a friend has purchased on Amazon.com, for example, according to a person familiar with Facebook's plans who was not authorized to talk to the press about it.

"Facebook is really turning what would normally feel like an advertisement into a friend's recommendation," said Lee Lorenzen, chief executive of Altura Ventures, a venture capital company that invests in companies in the Facebook ecosystem, such as outside firms that develop games for Facebook users. "I have the option of alerting my friend that I just bought something, and that will probably help goods spread more virally on Facebook."

But like many online advertising companies that track user behavior for commercial purposes, Facebook and MySpace could face greater backlash from privacy advocates.

"The defense of behavioral advertising has always been 'we don't know who the person is,' " said Leslie A. Harris, president and chief executive of the Center for Democracy and Technology, a privacy group. "Once you combine profiles with behavioral data, you certainly know who the person is. Users should be able to opt into that kind of situation, since it's not much different from combining offline and online data."