The Social Advertising Race Has Begun

-Facebook Connect Button-When Google and Facebook launched their social identity platforms over a week ago, few people realized the changed that occurred. It’s not surprising that few took note. Over a week later, there are less than 100 sites that have publicly integrated with Facebook Connect. Compare that to the more than 150 applications that were being launched daily immediately after the Facebook platform launched last year.

The platform continues at a steady pace but the rate of new Facebook Connect implementations is not growing as quickly. While the pace may be slow, all of that will be changing very soon. Personally, I’ve been working on my own application that will launch within days and I have read hundreds of other people state that they are in the process of integrating with Connect as well.

What’s the big deal here? Back in October I suggested that Facebook has a lack of inventory. Click thru rates on Facebook are hovering somewhere between 0.03 percent and 0.11 percent. While the cost per thousand impressions (CPMs) are typically low, it requires a substantial number of impressions to generate any leads resulting in a need for much more inventory. Thus most advertisers frequently can’t spend their entire advertising budget through Facebook’s self-serve system.

Connect Arrives

Facebook Connect has arrived and we have only begun to see the impact but the theory is that as more sites integrate with the service, advertisers will be able to have broader targeting capabilities. While this wasn’t Facbeook’s stated intent, the reality is that by using Facebook Connect and distributing services throughout the web, we can instantly have more information about users.

Want to launch an ad and target people based on their gender, location, and age? Previously, ad networks targeted users based on cookie data which involved piecing together sampled information from a broad range of sites. Also based on a user’s activity on the web, you could assume certain things about that user. For example, a user which previously visited Cosmopolitan.com is most likely a female.

As more sites implement Facebook Connect, websites will have access to more data than before. The rationale is that previously, users had little incentive to fill 100 percent accurate information on random sites around the web but on Facebook there is a deep incentive to fill in your profile with accurate information.

New Analytics

Companies like Sometrics and kontagent have been tracking social data about users within social networks but now that information can extend to the rest of the web. Toss in a cookie with a new Facebook Connect or Google Friend Connect user and suddenly you have a lot more information about that individual. Rather than attaching their activities directly to their unique Facebook ID, web traffic will be associated with a unique ID, which makes their web activity anonymous.

Lookery has been doing this for a while and now has a large amount of data about users visiting your site. They even provide a basic analytics package. I would argue that within the next 12 months, it will no longer be acceptable to simply know the approximate location of visitors to your site (as Google Analytics currently provides). Demographic based analytics data will become the norm.

The biggest players will rapidly aggregate large databases of anonymous users across a vast number of websites. While companies like Advertising.com/Platform A have been providing targeted advertisements for a while now, broad access to more accurate data will only improve their targeting algorithms. Which only brings about one question: what about Facebook?

Facebook’s Advertising Expansion

Facebook has been generating hundreds of millions of dollars via their advertising platform but so far there hasn’t appeared to be a breakthrough advertising solution as Randall Stross pointed out in the New York Times this weekend. I’ve argued repeatedly that the breakthrough will take place once Facebook extends their platform to the general web.

While Platform A and numerous other ad platforms provide behavioral and demographic targeting, none of them provide a self-serve solution for the masses that competes with Google AdWords. That’s where Facebook comes in and where I believe breakthroughs will begin to occur. Once Facebook Connect is solidified as a reliable platform, Facebook can take steps to open their ad platform to the web.

Put ads on your site and even if a Facebook user hasn’t registered for your site, Facebook knows who they are. That’s what gives the company a slight advantage over competing ad networks but unfortunately not a huge advantage. If Facebook played their cards right, they’d roll out a payment platform at the same time that they unleash Facebook Ads for the web. Enough of the speculation though.

Conclusion

With all the new social platforms extending to the web, it’s clear that the web is rapidly becoming more social. It also means that advertisers are going to have much more data about the people being targeted by their ads. As social data becomes free flowing, the race toward a global self-serve demographically targeted ad platform ensues.