
Facebook makes it official — an external advertising network is coming soon - iProject
http://gigaom.com/2012/11/23/facebook-makes-it-official-an-external-advertising-network-is-coming-soon/
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cletus
This article is more alarmist about this than is really justified (IMHO). What
they're talking about is Facebook creating a display advertising business, a
move so natural (IMHO) that I'm surprised it hasn't happened yet.

I'm just this will rattle the tinfoil hate brigade but this certainly isn't
"selling your data" as such. Publishers would make a call to FB Ad servers
that based on whatever algorithm they choose, would then serve you ads, just
like every other display business.

Facebook, in addition to knowing what you do, what you've liked and who you're
connected to on Facebook, also has a history of pretty much every Website
you've visited since they introduced the "Like" button. The comparisons to
Google's intent-based advertising on Google search is somewhat misleading as
this business would be closer to, say, Google's DoubleClick, a much smaller
business that operates on CPM rather than a CPC basis. If Facebook operated a
display business on a CPC basis, that would be noteworthy.

I agree with the revenue estimate of adding as much as $5 billion a year. I
came up with the same figure myself at Facebook's IPO to give myself a price
target of $12-15 (assuming a gross margin of, say, 20%). That estimate might
be low but it's not _that_ far off the (current) mark.

Personally I view these two data sources as:

1\. What you say: behaviour on Facebook; and

2\. What you do: the sites you visit.

(2) is what display advertising has been built on to this point and (IMHO) can
present a very accurate picture of what your interests, etc for ad targeting.

(1) is the big unknown. My personal opinion is that the value of this data is
a lot less than many predict. Actions speak louder than words. My own
experience with Facebook is that it presents a narrow view of yourself (in
most cases), presents the world how you think you're perceived or how you'd
like to be perceived or both.

The problem is that so few people are data producers. Most are data consumers.
It's the whole review problem with local: your audience is so small that
getting any reviews is hard and no matter what you do (IMHO) the majority of
people just aren't going to go around recommending or "Liking" their local
plumber.

So time will tell on the value of social signals. I for one am moderately
bearish.

Disclaimer: I work for Google in display advertising. All of the views
expressed are my own and do not represent the views of Google.

~~~
sek
This space is very competitive, if FB ads earn publishers significantly less
than DoubleClick then nobody will use it. It's a numbers game. Google is in
this space for almost a decade now and it's still small compared to Search.

The big thing for Facebook was always their gigantic inventory, never so much
the information. They have a few advantages here, but i think Age + Location +
Sex are still more important than all your likes together.

~~~
jQueryIsAwesome
The correlation with institutions is also a very useful to figure out
someone's economic situation. For example if all your friends are in Harvard
chances are that you are not poor; and that ads about expensive/luxury
services will convert better than for most people.

~~~
chimeracoder
> For example if all your friends are in Harvard chances are that you are not
> poor; and that ads about expensive/luxury services will convert better than
> for most people.

Perhaps, but a better predictor would still be whether or not the person has
searched for anything related to luxury goods in the past, thereby
demonstrating not only ability, but actual intent as well.

------
ig1
Gigaom are missing the point. It's unlikely that Facebook targeted ads on
third party sites are going to convert at a substantially better basis than
Google Ads where Google has a huge depth of expertise and data on optimising
for site content.

The biggest problem in ad networks isn't cost-per-click, it's fraud. And
that's where Facebook has a huge advantage, Facebook has a much deeper level
of expertise of telling a real user from a fake user. And that's Facebook's
edge if they decide to roll out an ad network.

~~~
mcrider
Is Facebook doing anything about these fake users though? I just started a
page like ad campaign on FB (I got a free $50 voucher so I figured what the
heck..), but of the ~120 likes I got it seems like 98% of them are fake, or at
least people that like 1000's of different pages and don't seem to convert to
my actual site at all.

~~~
ig1
Generally the above happens when you don't use targeting on your Facebook ads.
Different cultures and groups treat "likes" differently, so you shouldn't be
surprised if some groups are a bit gun-ho when it comes to liking pages.
Generally I've found that if you're using targeting the US or UK using keyword
targets that it isn't generally a problem.

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thetabyte
So, am I the only one who finds Facebook ads...actually kind of good? Sure,
they're horrifying in that they have the necessary information to target me
that well, but I'll get advertisements for a local comic shop, or for a game
that at least sounds interesting—although the product on the other end isn't
always fantastic, I find Facebook ads to be the few that actually show me
something I might be interested in.

~~~
eric_the_read
You're clearly not the only one, but I've never seen an ad on Facebook for
anything I was even remotely interested in. Mind you, that's mostly my fault,
because I refuse to Like anything unless I can control the publicity that Like
generates. I don't mind letting Facebook know I Like <X>, but I don't always
want all my friends to know that.

~~~
Evbn
It is interesting that Facebook is shooting itself in the foot by spamming on
Likes and discouraging Liking, instead of using them to target user-friendly
ads, which would br a virtuous cycle.

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uniclaude
This actually sounds like an unsurprising good news. Good because, provided
those ads work well, it might create a sort of counter power against Adsense,
which will likely benefit publishers and advertisers.

If Facebook gets to treat their publishers properly, as in, not like Adsense
seems to do (automated account suspensions & all that), Google might start to
see competition here.

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thematt
Protect yourself:

AdBlock:
[https://chrome.google.com/webstore/detail/adblock/gighmmpiob...](https://chrome.google.com/webstore/detail/adblock/gighmmpiobklfepjocnamgkkbiglidom)

Ghostery: <http://www.ghostery.com/>

Do Not Track Plus: <http://www.abine.com/dntdetail.php#>

------
MicahWedemeyer
Statements like this just sound a little slimy: _Everything you do and say on
Facebook can be used to serve you ads. Our policy says that we can advertise
services to you off of Facebook based on data we have on Facebook._

This is an excellent example of why I love the paid SaaS model so much more
than advertising. With a paid app, your customer is your user. With
advertising, the customer is the advertiser and they have very, very different
goals than the users.

~~~
ramblerman
That's actually a great argument in favor of SaaS I had never considered.

~~~
lubos
someone actually said it back in 2010

"If you are not paying for it, you're not the customer; you're the product
being sold."

[http://www.metafilter.com/95152/Userdriven-
discontent#325604...](http://www.metafilter.com/95152/Userdriven-
discontent#3256046)

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TazeTSchnitzel
Well, Facebook already knows tons about you from keyword-scanning your private
messages, analysing your FB usage patterns, "looking for friends" in your
phone's contacts, remembering your GPS positions in photographs, etc. And they
know where you've been on the net thanks to Like buttons and Comments widgets
everywhere.

I guess this is the next logical step. I'm even more scared than I was by
Phorm this time, though D:

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jiggy2011
So, why not just block all HTTP requests to anything on a domain owned by
facebook unless you are actually viewing a FB page?

~~~
beagle3
There's Ghostery, of course - but I found it was extremely slow on my machine
(as in, adding seconds of page load time), and while it is almost install-and-
forget, it's policy is limited to what the maintainers believe. Everything
else is "opt-out" with a GUI that's less than intuitive (or at least was, last
time I used it - I haven't been following development in the last two years).

But if you are using Firefox, the real gem for security conscious people is
RequestPolicy. The default setting is that every 3rd party access is opt-in
rather than opt-out. And when you start using it, you'll realize that there
are reasonable sites, but that every news site and many professional bloggers
connect to 20 different tracking services each (scorecard, aquantive, google
analytics, facebook, twitter, google plus, doubleclick, mediametrix, ... the
list goes on and on).

Schneier's website, as a counterexample, only makes a reference to eff.org.

Also, you get to realize the depth of referral links - I see some newegg links
(from e.g. fatwallet or dealnews) go through 10 redirects before arriving to
the actual website. And that Google and Youtube track every single click on
their site, even though they work very hard to make it look as if they send
you directly.

Seriously, if you are security conscious, RequestPolicy is a must. It takes
more work (e.g. a lot of sites rely on css and javascript from unrelated 3rd
parties, and break horribly without them), but in return for 10 more minutes
of work over a week, you actually have a good idea of who's trying to track
you, and makes everything opt-in rather than opt-out or no-option.

------
andreasklinger
I still hope they get the legal and lobby aspects of fb:credits to work.

Using my facebook account (think iphone + facebook app + nfc) to do my daily
payments would be a by far more qualitative businessmodel than ads.

Sure currently they are currently closer to sell ads than to implement an
digital currency.

But ads is an misaligned business model. Facebook is about people engaging
with their world. Liking an artist, checking in a store, listening to the
album - next: buying the (collectors edition) album.

Yes i know apple is closer to becoming our digital currency (as they already
do it since years). But having currency provider and gate to the internet
(iphone) connected seems wrong. Currency and identity feels in a weird way
more correct to me.

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khmel
This will have marginal impact on Fb revenue for 2 reasons:

1\. What people share on Facebook <> what people really want to
buy\consume\order

People are trying to look nice on Facebook. Facebook has to come up with some
non-trivial statistics. What those guy who liked SF Giants and Obama is
willing to buy. This requires 'Hunch-like' insights. And we know that Hunch
business model was not a big success. Google's exercise is much easier,
becuase Google knows what user's looking for, privacy of search request helps
a lot. This could be fixed in only one way - through introduction of search
engine within Facebook. Facebook could acquire Blekko or hire bunch of people
from Google\Bing.

2\. Site owners will get higher CPM with Google than Facebook. And will prefer
using Google ads in most cases, not Facebook ad.

This will happen for the same reason as N1, Google has higher advertising
relevancy and offered price than Facebook. Facebook will be sucessful at niche
sites only - like Zynga, junk sites that are blocked by Google, etc. This
could work for brand advertising, with pay-per-view model.

------
jonchang
This story is sensationalist and false. There is no external advertising
network that Facebook wants to sell your data to. Facebook is changing this
particular policy so that they can share data among its subsidiaries, like
Facebook Ireland and Instagram. The "tracked changes" version of their data
use policy [1] makes this clear on the last page (emphasis mine):

> We may share information we receive with businesses _that are legally part
> of the same group of companies that Facebook is part of, or that become part
> of that group_ (often these companies are called affiliates). Likewise, our
> affiliates may share information with us as well. We and our affiliates may
> use shared information to help provide, understand, and improve our services
> and their own services.

[1]: [https://fbcdn-dragon-a.akamaihd.net/cfs-ak-
ash3/676592/128/4...](https://fbcdn-dragon-a.akamaihd.net/cfs-ak-
ash3/676592/128/460431350669077_1584612884.pdf#page=15) (PDF)

~~~
julien_c
I don't think this is the story's main point. If Facebook rolls out an
AdSense-like product for publishers they're effectively building an external
ad network (external as in outside facebook.com, not outside Facebook), right?

~~~
khmel
It does not matter if site already has any Fb services (likes, recommends,
sharing)- Facebook callback could be easily added to any site together with
advertisment module. It means that Facebook will deliver to ad module that ad
that is most likely will be clicked according to site's user fb profile,
likes, etc.

------
mcovey
Interesting to see Facebook's progression from a social network for students
to an advertising network. This may actually be good for their shareholders,
as social networking seems to have been unprofitable for them. Nothing lasts
forever on the internet - except perhaps the text-only websites of professors
on .ac.uk domains - and Facebook's future may be not as a social network, but
as an advertising network. I'm speculating, but given the general shift (at
least as I've seen) away from Facebook as a social network, changing their
game might be the only way to stay afloat.

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zerostar07
Facebook places much more value on its social graph than it really has. What
your friends like and what you liked a year ago are mostly irrelevant at the
moment you are browsing.

After all, it's been found that, as a generic ad platform, facebook ads are
not nearly as effective as google's ad platforms. I bet that, over time, FB
will have to make changes to their ad product to be more like AdSense. Or even
worse, it could be like the facebook credits farce.

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bemmu
The natural place for these ads would seem to be on Facebook canvas apps. They
already have those ad slots optimized, since Facebook shows their own ads
outside of the canvas area. There is no competition from Google because
Facebook does not allow you to use AdSense in the canvas area.

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narayanb
Yesterday as I was watching a video on Youtube, I saw a facebook banner ad
(yeah "Ads by Google"). As I was logged into Facebook and Google at that time,
the 'targeting' was pretty off. I would blame it on Google. Now probably
facebook would have better intelligence. Let's see.

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salman89
If anyone believes that Facebook isn't already doing retargeting based on
cookies they are completely wrong. It isn't a publicly available feature for
advertisers, but they do have it setup and running for specific partners.

~~~
jonknee
That's not this is talking about, Facebook's dabble into retargeting is well
known (<http://techcrunch.com/2012/09/13/facebook-exchange-results/>). The
article is talking about an AdSense competitor.

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KaoruAoiShiho
I fear for google. This is probably going to demolish adsense.

~~~
TomGullen
Quite a big prediction there

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djt
Still doesn't solve the "intent" problem.

I doubt that people are going to "Like" erectile dysfunction Pages anytime
soon.

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flxmglrb
> "Soon, Facebook ads could follow you around the web"

Not if I block them.

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dschiptsov
MySpace trajectory?)

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jQueryIsAwesome
The quality of Facebook ads is so shady that I fear this will bring nothing
good for the users.

Speaking of wish the most common ads I get in Facebook are those where they
trick people into agreeing to get expensive and recurrent SMS messages; like a
parasite of your wallet. That should be illegal.

~~~
ig1
They're against Facebook's advertising policy, if you hover over the ads
you'll get a little cross in the corner which you can click to report them.

