Facebook's Hidden Ad Network Release?

As I covered last week, Facebook has begun to release demographing information via their advance Flyers system. Valleywag appears to be hyping this up to be Facebook’s stealth ad system. Honestly, there is nothing stealth about this. Facebook announced the release of their new advertising system over a month ago. The primary benefit of this new system is that it is based on a cost-per-click (CPC) model rather than cost-per-impression (CPM).

Facebook is indeed taking a bite out of the online advertising market. Their new system enables advertisers to target better than any other advertising system out there. For those that argue that much of the profile data is inaccurate, Facebook can easily filter through those. Will Facebook upgrade their ad network to enable better ad placement?

Currently, Facebook simply places a flyer in the left hand side of the site. This positioning has historically horrendous click-thru rates (somewhere around 0.04%). If Facebook embedded ads within profiles, it may make the system more effective. Conversely, placing ads in more strategic locations may result in a backlash from users (similar to the one experienced when they launched newsfeed).

So is this the much anticipated advertising system that has been rumored for the past few months? Nope. It is one component but Facebook is going to soon enable developers to monetize their applications, something that until now has been offered only by third parties. Will Flyers be the primary monetization model for app developers? Probably. Any other form of advertising would be a direct attack on existing advertising solutions.

While I think the upgrade to the Facebook Flyers is a step toward Facebook’s much anticipated advertising system for developers, I think it is simply that, a step. In addition to advertising solutions, developers are calling for more effective analytics solutions. The bottom line is that there are a number of features left to add before Facebook becomes the spectacular advertising system that many have been dreaming of.

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