The Facebook ads of the (imminent) future +

The present

Internet advertising works. It generates profit (everyone knows the famous and often quoted moment of Internet advertising spending surpassing TV in the UK back in 2009). Shitload of business models revolve around one form of advertising or another.

Facebook’s revenues come from (surprise!) advertising. They only serve stuff from Microsoft’s advertising inventory. The CTR is awful compared to most major websites. So, basically, advertising on facebook.com generally sucks. It generates revenues due to sheer volume. But from an advertiser’s perspective it sucks. From the user’s perspective too. They don’t care about ads on facebook. Source.

The future

Simple. Start serving that same inventory everywhere, as in, all over the web. Maybe even remove standard banner advertising altogether from facebook.com.
Yes, they can even make the advertisers bid for placements in pretty much the same way Google is auctioning their ad slots. Or not, it doesn’t really matter.

Wait, what?

Facebook’s technical infrastructure for dominating the advertising market is already built: one has to try really, really hard to find a page on the Web today that hasn’t got a Like, Share or some other type of Facebook’s Javascript widget. Through that widget they can place whatever they want. Not just the boring (con)textual ads — think standard banner formats, floaters, takeovers (interstitials), expanders, wallpapers or any other new form of promotion that’ll eventually be developed.

The user/visitor of an external site doesn’t even have to know that the ad came via Facebook. He doesn’t really care — it’s highly targeted, caters to his every need and desire, and was just what he was thinking of, or searched for, or browsed for, or [insert your advertising wet dream here] recently anyway.

And then there was data…

Facebook’s edge over every other ad platform today is: data. Tons of organic attention data, the social graph data, combined with detailed demographics as a cherry on top. Think about that for a second. OK, now consider that even AdWord’s demographic targeting is limited to users from the United States only. Now consider this: About 70% of Facebook users are outside the United States, More than 150 million people engage with Facebook on external websites every month… You get the picture.

I don’t have to remind you that Facebook knows everything about their users, even when they’re not on Facebook directly, but just browsing a page that has the Like button on it. Combined with the fact that every page/website is automatically an ad publisher (without anyone doing any extra work on the publishing end), we have ourselves a recipe for advertising domination satisfying every advertiser’s wet dream.

What’s missing?

Basically nothing. Perhaps just a few tiny changes in Facebook Platform Policies. You’ve read those before using the platform, right? :)
They currently state: “We can change these Platform Policies at any time without prior notice as we deem necessary. Your continued use of Platform constitutes acceptance of those changes.”

P.S.

Yes, other major players have their own widgets, but nowhere near the numbers of Facebook’s “installed userbase”, and nowhere near the amount of data about their users. Quick recap as best as I can recall right now:

• Google Analytics — doable, but I’m not sure they have the demographic data. No social graph either. Not at the Facebook scale anyway. And I don’t think there are quite as many GA script tags out there as there are Like buttons. 2 million websites use it, according to this. The new Facebook Like debuted in April this year (at f8 conference), and according to this it is also in the 2 million range already.
• Youtube (which is Google’s) has the potential due to volume of users and data, but they’re trapped within Flash, and can basically serve ads only inside the Flash container. They do that, partnering with big copyright owners. They’re “hovering near profitability” — which is a polite way of saying they’re still loosing money with Youtube.
• Forsqure is giving the idea an interesting spin, although it remains to be seen how many web pages will “install” the widget — Facebook can probably act right now.
• Myspace could maybe use their audio player, but it would still constrain the ad placement to the myspace.com profile pages. So not that interesting to advertisers (compared to pushing your ad automatically to the whole www)
• Yahoo bet outside the browser with Konfabulator/Widgets back in 2005. Cool platform, but ultimately not very useful (from a revenue-generating online advertising perspective), the original authors left Yahoo, and the future is in the browser anyway. Right now, I can’t think of any massively deployed javascript widgets running in the browser that belong to Yahoo (in one way or another). There’s YUI, but that’s an entirely different game. Maps maybe, but again, not so widely spread.