Facebook developing own ad targeting technology

Facebook, the booming social network company, is quietly creating a technology that would let advertisers target Facebook users based on the “massive amounts of information people reveal” about themselves, according to a story in today’s WSJ.

The new ad plan, reportedly being led by Matt Cohler (pictured top), vice president of strategy and business operations, and Chamath Palihapitiya (pictured below), vice president of product marketing and operations, may produce some serious concerns among some of Facebook’s partners.

Advertisers placing ads on your profile page will have access not only to your age, gender and location, as they do now, but also on details such as favorite activities and preferred music, according to the piece. They wouldn’t have access to your name however — and thereby have no way to target you as as an individual. Rather, Facebook would let advertisers target groups with similar characteristics.

But the biggest bombshell of the piece is this line: “In addition, the ads would show up on Facebook pages that feature services provided by other companies, one person says.” If true, this suggests Facebook wants to advertise on pages controlled by third-party developers on Facebook’s “platform.” This could be a slap in the face to those parties because Facebook had previously said it would let them make money by running their own advertisements. However, the sourcing and wording of the article on this matter is vague. It’s quite possible that Facebook may let third-parties access the technology, and agree to some sort of revenue share, letting all parties win. It’s all speculation at this point.

A Facebook spokesperson declined to comment for the article. Worth noting is that numerous companies have launched their own ad networks to run on Facebook’s third-party applications (these companies include Lookery, RockYou and VideoEgg). Microsoft, which has a large deal with Facebook to run its own ads, may have its own concerns about the program. The advertising rates advertisers are getting on Facebook is being highly debated. Some reports suggest rates are as high as $10 CPM in some cases. However, a source told us recently that Microsoft is losing money on every ad it serves on Facebook. We ran this by Facebook two weeks ago, but a spokesperson declined to comment on rates, saying only that the relationship with Microsoft was strong. Microsoft recently extended its partnership with Facebook, suggesting things can’t be too bad, or even that Microsoft itself may be in on the ad targeting plan being developed. Again, we don’t know.