Facebook gives social spin to online ads

Facebook presented its master plan for boosting its advertising revenue now that it has the challenge of living up to its stratospheric $15 billion valuation.

On Tuesday at an event in New York for its advertisers, it announced Facebook Ads, an ad system designed to let advertisers more precisely target users of the social network.

With its revenue expected to hit a reported $150 million this year, Facebook needs to do a better job of targeting and distributing ads in its social-networking site, the world's second most popular behind MySpace. Expectations are high that Facebook's ad revenue can skyrocket, since it has a fast-growing base of about 50 million active users who voluntarily disclose a lot of information about themselves in their profiles and through their activities on the site.

The Facebook Ads program, which has the support of about 60 advertisers including Blockbuster, The Coca-Cola Company, and Verizon Wireless, has three major components.

First, businesses can create profiles on Facebook, like individuals do. Second, SocialAds will make it possible for people to share advertising information they find compelling. Finally, Facebook will provide information about people's actions via an interface to marketers.

At launch, more than 100,000 business profiles, called Facebook Pages, were on the site. Each business can design its page as it sees fit, posting information, photos, videos, music, and applications with which Facebook users can interact.

People's activities on a business Facebook Page can then be shared with their Facebook "friends," which, as Facebook sees it, will enhance the advertising information because it will come referred by a known acquaintance.

In other words, an advertisers' message isn't necessarily delivered directly by the business, but rather distributed among their network of friends.

A business could, for example, let Facebook users engage in a variety of activities on its page, such as posting reviews and photos or making purchases, and people in turn could inform their friends about their actions via Facebook's automated notification systems.

Finally, with Facebook Insights, the company will give advertisers access to data about actions, demographics, ad performance, and trends on their pages. It won't, however, divulge information that could be used to identify and single out individuals.

The company also announced a program to let its users share on the social network what they do on sites outside of Facebook. There are 44 Web sites participating on Facebook Beacon, as the program is called.

The Web sites decide which actions visitors can automatically report back to their Facebook friends, such as listing a product for sale, buying an item, or viewing a video clip.

Some of the sites participating in Beacon are eBay, Fandango, CollegeHumor, Travelocity, and Citysearch.

Facebook, founded in 2004 and led by 23-year-old CEO Mark Zuckerberg, recently sold a $240 million minority stake to Microsoft, which provides ads for the site. Facebook expects to have about 700 employees a year from now, up from about 300 today.