Facebook Unveils Ad Targeting Program

The Associated Press
Wednesday, November 7, 2007; 9:51 AM

NEW YORK -- Now that Facebook has unveiled plans to target advertisements by injecting them into its members' conversations, the popular online hangout must persuade its users to embrace the initiative.

Facebook is giving users some control over whether to share information on their buying habits and other online activities with friends. For the program announced Tuesday to work, enough users must actually say "yes" so advertisers can show users their pitches in the guise of friends' endorsements.

David Hallerman, a senior analyst at the research group eMarketer, warned that users might not be as receptive to ads when they are communicating with friends on Facebook as they might when they are reading articles elsewhere in a more relaxed, consuming state.

"Facebook is everyone's darling today," he said. "If there is a perceptual problem as a safe place for communications, then will it be 2009's darling?"

Facebook's announcement follows by two weeks Facebook Inc.'s deal to sell a 1.6 percent stake to Microsoft Corp. for $240 million, valuing Facebook at $15 billion. Microsoft also broadened a marketing relationship that began last year. The ad program announced Tuesday was unrelated to either deal with Microsoft.

In announcing the initiative, Palo Alto, Calif.-based Facebook has begun transforming itself from an online hangout into an online business district. Companies can now create their own pages on Facebook for free and tailor their pitches to the activities of users' friends.

For example, if a friend has booked a vacation on Travelocity, the online travel agency will be able to display the friend's photo as part of a "social ad" to entice the user to buy flights and hotel stays. Advertisers can similarly have their pitches appear when friends review restaurants and buy books or DVDs.

Companies can even embed coding Facebook calls "Beacon" on outside sites such as eBay Inc., enabling a Facebook user who lists an item for auction, for example, to generate alert messages for Facebook friends, who may then check out the item.

"People influence people," said Facebook Chief Executive Mark Zuckerberg, who founded the company three years ago. "Nothing influences a person more than a recommendation from a trusted friend."

Although the friend can control what is shared, the user will have fewer choices over whether to receive ads, which would be marked "sponsored."

As Web companies look to boost advertising revenue by offering to target ads based on users' hobbies, interests and behavior, Facebook's move could change the tone of the site and revive privacy complaints it faced last year. Facebook will rely on information in users' profiles and on friends' online activity to determine what ads might appeal to users.

Key will be how Facebook tells users about the program. Facebook described the changes in a blog posting, but not prominently when users logged on Wednesday morning.

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© 2007 The Associated Press