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Facebook to open goldmine
of data to advertisers
Tom Bawden
London
Times
Friday Aug 24, 2007
Facebook is preparing an advertising model that would allow
advertisers to target its users based on information that they
reveal about themselves on the social networking website.
The group has soared in popularity to a record 30.6 million visitors
last month, but is expected to make a profit of only $30 million
(£15 million) this year on revenues of $150 million. Facebook’s
new advertising system is central to the group’s efforts
to “monetise” the social phenomenon that it has created,
by which millions of people worldwide avidly log in to swap information
about themselves.
The site is a potential goldmine to advertisers because it contains
a host of data on its users, such as their birthdate, interests,
events they plan to attend, holidays and musical tastes, as well
as numerous photographs. The new model is at an early stage, but
is to be piloted soon. It will enable advertisers to visit a dedicated
website through which they could track down users more precisely
than using traditional, blunter, targeting methods.
(Article continues below)
The advertisements are expected to appear differently from the
banner ads and boxes that show up on the borders of Facebook pages
at present. Instead, they would be mixed up with the “news
feed”, which provides updates on the activities of each
user’s friends.
Facebook’s attempt to boost advertising revenues by extending
information about its members to advertisers echoes moves by Google
to target ads based on the browsing activity of its users.
Roger Kay, the president of End-point Technologies, a US consultancy,
said: “People get disconcerted about what appears to be
the close monitoring of their behaviour. If you go to an XXX site
and you get a condom ad popping up, it feels creepy.
“Google tried this kind of targeted approach and there
were some complaints, and the group seems to have become more
subtle about it. With Facebook, the new ad system may lead to
some drop-off in users, but it’s a popular site so it shouldn’t
hurt too much.”
Facebook does not have a wealthy parent company to prop it up,
and so it is essential that the group record strong revenue growth,
and an effective advertising system is by far the best way to
do this, analysts say.
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