Facebook to allow targeted ads
NEW YORK – Facebook has begun transforming itself from an online hangout into an online business district.
Companies can create their own pages on Facebook for the first time and target ads on Facebook based on what users and their friends buy and do online, under a new program announced Tuesday. Advertisers also will be able to show users their pitches in the guise of a friend’s endorsement.
For example, if the friend just booked a vacation on Travelocity, the online travel agency will be able to display the friend’s photo to entice the user to buy flights and hotel stays.
The friend would have control over whether to share that information, but the user would have fewer choices over whether to receive it.
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.
Key will be how Facebook tells users about the program, something it plans to do shortly.
“Some people may find it creepy,” said Deborah Pierce, executive director of the San Francisco-based Privacy Activism. “They are trying to find some ways to monetize this and keep the lights on. If the disclosure is up front, yeah, I think this is a reasonable thing for them to do.”
Facebook chief executive Mark Zuckerberg, who founded the company three years ago, said marketers must respond to the changing nature of communication, driven in part by social-networking sites like his.
“Pushing your message out to people is no longer good enough,” Zuckerberg told about 200 advertising-industry executives. “You have to get your message out to the conversations.”
Facebook will allow companies to build profile pages similar to the ones millions of users around the world now maintain. The key difference is that companies won’t have access to user profile pages the same way users’ friends do, even if the user has formally added him or herself to its “fans.”
Companies also can now embed coding that Facebook calls Beacon on outside sites such as eBay, enabling a Facebook user who lists an item for auction, for example, to generate alert messages for their Facebook friends, who may then check out the item next time they log on.
Users can now send alerts to friends about their reviews of restaurants, what band they enjoyed and what books or DVDs they bought online. And advertisers can have their pitches appear next to those alerts.
“People influence people,” Zuckerberg said. “Nothing influences a person more than a recommendation from a trusted friend.”
The new program also enables advertisers to fine-tune their audiences – having their pitches appear only to women under 30 who attended New York University and work at Goldman Sachs, for instance.
Self-service tools let advertisers immediately see how many users they will reach as they change their criteria.
Social-networking sites like Facebook and News Corp.’s MySpace have been trying to find the best way to profit from the trove of personal data their users put on profile pages. On Monday, MySpace announced an expansion of its targeting program to include more categories and more advertisers.