Facebook's ad plans let marketers capitalize on friends

Looking to turn its popularity with 50 million users into dollars, social-networking giant Facebook Tuesday announced new advertising initiatives.
Marketers will be able to create their own Facebook profile pages. They'll also be able to target Facebook members with ads based on the personal information members send friends on the site. Among several dozen marketers signed up: Coca-Cola (KO) and Blockbuster (BBI).
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"Pushing your message out to people isn't enough anymore," Facebook CEO Mark Zuckerberg told an audience of potential advertisers here. "You have to get into the connections and conversations."
What Facebook will now offer:
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•Brand profile pages. Similar to how users build profile pages, marketers can create Facebook pages that tout their brand, make sales, have entertainment and offer branded applications, such as a ring-tone creator, that members can add to their own pages.
•Tailored ads. A Facebook user can sign up as a "fan" of brands that have profile pages. Then a message could be sent to his or her network of friends telling them of that new liaison — along with an ad.
•Partnerships with retailers. Facebook has signed 44 retail sites to broadcast member purchases to others. When a user logged into Facebook visits a site, they'll be prompted that unless they opt out, their action — such as a Caddyshack rental from Blockbuster — will be shared with their friends network.
Traditional marketing "is distorted," says Jeremiah Owyang, an analyst at Forrester Research. "Endorsements are now passed from trusted customers to prospects, not directly from the brands themselves."
The moves come as Facebook slugs it out with rivals MySpace and Google (GOOG) for online advertising revenue. Ads on social networks are expected to haul in $1.2 billion worldwide this year and $1.9 billion in 2008, researcher eMarketer says.
Facebook, which already serves some less-targeted ads on its network, is expected to post a $30 million profit on $140 million in revenue this year, according to Robert Peck, an analyst at Bear Stearns. Last month, Microsoft (MSFT) said it would pay $240 million for 1.6% of privately held Facebook. That deal puts a $15 billion value on the social-networking site.
On Monday, MySpace — the largest social network, with 110 million users — said it's expanding its ad sales network with a program deemed "hypertargeting." Using data MySpace members provide, advertisers now can target them with very specific ads. More than 50 marketers have signed up, including Procter & Gamble (PG), Toyota (TM) and Taco Bell.
While targeting based on user data may serve up more relevant ads, it also raises privacy concerns for Facebook members, who use it as a personalized scrapbook to socialize with friends and colleagues.
The sites may address that. Facebook's Zuckerberg says that if users express privacy concerns, "We'll react quickly to that." MySpace says that by year's end, it will have a way for users to opt out of targeted ads.
"It seems a little invasive," says Shenneth Dove-Morse, 23, a public-relations specialist in Washington, D.C., who uses Facebook. "This would make me more cautious about what I say about myself on my personal page."