How Facebook Social Ads work
Following in the footsteps of social networking rival MySpace, Facebook has begun delivering ads to members based on what they do and who they know. The programme is called Social Ads.
The move was long awaited by industry analysts wondering how Facebook will cash in on its booming popularity and capitalise on the ad-delivery alliance it made last month with technology giant Microsoft.
Companies can advertise on their own profile pages on Facebook as well as spread messages "virally" by linking ads to recommendations or news feeds members send to each other.
Here's how the new ad programme, which has triggered widespread security concerns, will work.
How will advertisers target pitches based on user behavior
Social Ads starts with an online action taken by a friend - for example, adding a review of a local restaurant, declaring admiration for a band or buying a vacation package at a travel site. That can happen at an outside site that embeds coding called a Beacon - auctioneer eBay Inc. and movie tickets vendor Fandango are among the 44 initial participants.
The online action can also occur on one of the more than 100,000 company Facebook pages that are launching. A user will see an alert, known as a "News Feed" item, indicating that the friend has bought a DVD or posted a review. The social ads could appear next to those alerts - with the friend's photo, though marked "sponsored" - or as a banner ad on the left.
Ads are not targeted based on a user's own activities - just of friends' - as there's no reason to pitch a book you've just bought. However, Facebook will consider biographical and interest information a user declares in profiles, such as age, gender, relationship status, political view and college attended. Advertisers, for instance, can have pitches appear only to women under 30 who attended New York University and work at Goldman Sachs.
What if I don't want my friend know what I've done?
Before an outside site sends information to Facebook through the Beacon, users are asked whether they want the information shared and are reminded the next time they log on. Users can change their privacy settings to always or never share. Fewer options are available for activities at company pages.
A user can avoid the activity completely - such as never posting a review or becoming a fan of the company. Or a user can manually remove items individually from the personal News Feed that friends will see, though Chief Privacy Officer Chris Kelly said Facebook had no current plans to offer blanket removal.
What if I don't want targeted ads?
Soon, users will have the option of lowering the frequency of social ads and other types of News Feeds, though they won't be able to reject them completely, said Chamath Palihapitiya, Facebook's vice president for product marketing and operations. Officials say they will consider additional options if users demand them.
What ads are covered by this programme?
Targeting based on friends' online behavior applies to social ads that appear next to News Feed alerts. A similar banner ad may appear to the left, but for the most part banner ads are targeted only to biographical and interest information declared in profiles.
What does it cost?
Companies can create pages and add Beacons for free. They are charged to place banner and social ads - their choice of a per-view or per-click basis - using an auction system that gives priority to advertisers willing to pay more.
Advertisers will get free tools for analysing user demographics, ad performance and other trends to help customize their pages and adjust their ad targeting.
