Earlier today Lee Lorenzen of Altura Ventures sent me a message referencing a note where he postulates about Facebook’s upcoming ad network. He brought up something that I previously hadn’t thought of: the opening of Facebook’s ad network. Imagine if Facebook, who now has access to over 50 million users’ personal information could target ads based on those profiles anywhere on the web. It’s not far fetched and it is exactly what Facebook will be announcing on November 6th when they announce the SocialAds network.
After speaking with an individual with specific knowledge of how the network is being structured, I was informed that Facebook will be leveraging the cookies installed in users’ browsers after logging into Facebook in order to target them across the web. In the instance that the user doesn’t have one of the Facebook cookies installed, ads similar to those of what Google currently provides will be displayed. Now for those wondering why on earth Microsoft would invest $240 million in Facebook (while Steve Ballmer strategically played down the value of Facebook), this is it.
Thanks to their advertising partnership, Microsoft will now be able to provide targeted ads not only based on demographic data (location, age, gender, etc), but they will also know that the person visiting your site is interested in skiing and guitar. So how much money will Facebook make from this? A ton. Higher CPMs and CPCs will create a new competitive landscape between Google and Facebook. Facebook to Google: we are gunning for you.