Facebook Gets Personal With Ad Targeting Plan
Social-networking Web site Facebook Inc. is quietly working on a new advertising system that would let marketers target users with ads based on the massive amounts of information people reveal on the site about themselves.
Context & Ripple Effects
The Wall Street Journal's report, picked up the same day by VentureBeat, describes Facebook Inc. quietly building an in-house advertising system that would let marketers aim ads using the personal details users volunteer on the site — schools, interests, demographics — rather than the page content an ad happens to sit next to.
The significance is structural: a social network's core asset is not pageviews but self-declared identity, and this move would convert that asset into a direct sales pitch to advertisers. The story landed with no announced launch date, marking the moment profile-based targeting moved from concept to active product development at the fastest-growing network.
First-order effects
- Advertisers buying Facebook inventory would shift from context- and placement-based buys to audience-defined campaigns keyed to profile attributes, changing how media plans on the site are constructed.
- Facebook would internalize ad targeting technology instead of routing inventory through third-party ad networks, capturing both the data advantage and the margin.
Second-order effects
- Competing social networks holding similar troves of self-reported user data face pressure to build equivalent targeting products or cede premium ad pricing to Facebook.
- Ad networks and intermediaries that currently package social-networking inventory for brand marketers lose leverage if platforms sell audience-targeted placements directly.
Third-order effects
- If profile-derived targeting becomes the standard across social networks, user self-disclosure turns into a priced economic input, putting privacy expectations and eventual regulatory scrutiny of social-graph data use on the industry agenda.
- Advertising economics tilt toward platforms that own rich declared-identity data over publishers that own only content, widening the gap between social networks and traditional web publishers.
The trend: Online advertising is shifting from targeting what pages users read to targeting who users say they are, with social networks' profile data as the new currency.