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The impact of Facebook’s personal ad targeting on online revenues might be more than skin deep 8/23/07

Posted by Steve Boriss in Uncategorized.
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In the experiment everyone has been waiting for, the Wall Street Journal reports that Facebook is poised to begin reading and processing user-posted personal information to match-up advertisers’ ads with their best sales prospects. Mass media at its best has only allowed advertisers to weigh their spending along the broadest of measures (e.g. age, sex, income, location), while targeted media (e.g. direct mail, telemarketing, niche magazine ads) have been relatively expensive on a per impression basis because of high delivery costs. The Facebook initiative holds out the promise of combining deeper-than-ever insights into individuals’ potential buying interests (e.g. music they like, favorite activities) with the negligible delivery costs of the web.

But something getting less attention may, in the end, be a more important breakthrough. For a while now, Facebookers have been receiving “newsfeeds,” essentially presenting changes in friends’ pages as “news.” Now Facebook is experimenting with interspersing ads in the newsfeeds, further expanding the definition of news. The wall between news and ads seems to be falling down.

But the truth is, ads have always been news. New information about what’s now available, where, and at what price can be very valuable. In the 19th century, America was served by a large number of mercantile newspapers that consisted almost entirely of ads. And it’s no secret that many buy magazines like Vogue and Bride mostly because of the ads. So, while Facebook nosily sniffs into our postings, peers into our personal lives, and gabs to advertisers about how to persuade us, journalists who want to keep news and advertising separate have little reason to smile. (Hat tip: Garry Rains)

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