Facebook makes it official — an external advertising network is coming soon | Hacker News Reader

Facebook makes it official — an external advertising network is coming soon

gigaom.com

89 pointsiProject56 comments

This article is more alarmist about this than is really justified (IMHO). What they're talking about is Facebook creating a display advertising business, a move so natural (IMHO) that I'm surprised it hasn't happened yet.

I'm just this will rattle the tinfoil hate brigade but this certainly isn't "selling your data" as such. Publishers would make a call to FB Ad servers that based on whatever algorithm they choose, would then serve you ads, just like every other display business.

Facebook, in addition to knowing what you do, what you've liked and who you're connected to on Facebook, also has a history of pretty much every Website you've visited since they introduced the "Like" button. The comparisons to Google's intent-based advertising on Google search is somewhat misleading as this business would be closer to, say, Google's DoubleClick, a much smaller business that operates on CPM rather than a CPC basis. If Facebook operated a display business on a CPC basis, that would be noteworthy.

I agree with the revenue estimate of adding as much as $5 billion a year. I came up with the same figure myself at Facebook's IPO to give myself a price target of $12-15 (assuming a gross margin of, say, 20%). That estimate might be low but it's not that far off the (current) mark.

Personally I view these two data sources as:

1. What you say: behaviour on Facebook; and

2. What you do: the sites you visit.

(2) is what display advertising has been built on to this point and (IMHO) can present a very accurate picture of what your interests, etc for ad targeting.

(1) is the big unknown. My personal opinion is that the value of this data is a lot less than many predict. Actions speak louder than words. My own experience with Facebook is that it presents a narrow view of yourself (in most cases), presents the world how you think you're perceived or how you'd like to be perceived or both.

The problem is that so few people are data producers. Most are data consumers. It's the whole review problem with local: your audience is so small that getting any reviews is hard and no matter what you do (IMHO) the majority of people just aren't going to go around recommending or "Liking" their local plumber.

So time will tell on the value of social signals. I for one am moderately bearish.

Disclaimer: I work for Google in display advertising. All of the views expressed are my own and do not represent the views of Google.

This space is very competitive, if FB ads earn publishers significantly less than DoubleClick then nobody will use it. It's a numbers game. Google is in this space for almost a decade now and it's still small compared to Search.

The big thing for Facebook was always their gigantic inventory, never so much the information. They have a few advantages here, but i think Age + Location + Sex are still more important than all your likes together.

The correlation with institutions is also a very useful to figure out someone's economic situation. For example if all your friends are in Harvard chances are that you are not poor; and that ads about expensive/luxury services will convert better than for most people.

> For example if all your friends are in Harvard chances are that you are not poor; and that ads about expensive/luxury services will convert better than for most people.

Perhaps, but a better predictor would still be whether or not the person has searched for anything related to luxury goods in the past, thereby demonstrating not only ability, but actual intent as well.

Can you dig into (1) a bit more? Agree that most people are consumers not producers - but FB cleverly and incessantly worked towards making the most hardened consumer into a producer (Like being the first incarnation thereof). Half that site's audience visits every day. They like brand pages and friend's posts. They disclose location when they upload photos.

All of this is low-friction data production unlike the review example you use above (most people are terrible at writing original content unless absolutely required to do so).

This is what we've all been waiting for: CPM ads based on age and gender. This is the holy grail advertisers have wanted. But it remains to be seen if this information actually translates into better online advertising. We will soon see. I'm skeptical. I am almost positive that this won't lead to better CPMs, higher click throughs. This might make brand advertisers, who don't care about that stuff, happier.. but still won't want to put ads on a penis growing forum. TV is what they like. So yeah, we'll see, but I'm not expecting much.

Tubbo, you've been hellbanned for months. Nobody can see your posts...

(really dislike that method of banning people - he has pages of thoughtful contributions)

> Facebook, in addition to knowing what you do, what you've liked and who you're connected to on Facebook, also has a history of pretty much every Website you've visited since they introduced the "Like" button.

And unfortunately they refuse to produce this history when asked (as is required by EU privacy law).

In any case it should be interesting to see how they will implement this: Their tracking like button seems to have survived largely based on the fact that people don't know about the tracking. When it comes under scrunity from privacy commissioners (for example in Schleswig-Holstein in Germany), it unsurprisingly seems to be considered to violate privacy laws. Without a similar mechanism it will be hard to serve personalized ads, but general awareness of Facebook's (and other's) privacy practices seems to be growing...

Gigaom are missing the point. It's unlikely that Facebook targeted ads on third party sites are going to convert at a substantially better basis than Google Ads where Google has a huge depth of expertise and data on optimising for site content.

The biggest problem in ad networks isn't cost-per-click, it's fraud. And that's where Facebook has a huge advantage, Facebook has a much deeper level of expertise of telling a real user from a fake user. And that's Facebook's edge if they decide to roll out an ad network.

Why would they care? From their perspective, a click is good - no matter where it comes from.

Because click fraud means higher customer acquisition cost for advertisers, which means advertisers stop advertising.

It also drains advertising dollars away from legitimate content producers to fraudsters meaning that they switch away to other ad platforms.

To maintain a two-sided market you need to ensure both sides of the market are healthy, click-fraud damages both sides of the market and so is very dangerous.

Which is a nice theory, but there's apparently already a huge amount of click fraud in Facebook advertising and Facebook haven't done anything about it so far.

Onsite fraud doesn't matter because FB can lower cost per click to compensate -- there is no third party stealing money.

Matter to whom? Facebook is the party stealing money in this scenario...

Is Facebook doing anything about these fake users though? I just started a page like ad campaign on FB (I got a free $50 voucher so I figured what the heck..), but of the ~120 likes I got it seems like 98% of them are fake, or at least people that like 1000's of different pages and don't seem to convert to my actual site at all.

Generally the above happens when you don't use targeting on your Facebook ads. Different cultures and groups treat "likes" differently, so you shouldn't be surprised if some groups are a bit gun-ho when it comes to liking pages. Generally I've found that if you're using targeting the US or UK using keyword targets that it isn't generally a problem.

"The biggest problem in ad networks isn't cost-per-click, it's fraud. And that's where Facebook has a huge advantage"

wat? In what world do you live in where Facebook has a huge advantage, let alone any advantage, over Google who has been tackling the problem of click fraud for 10+ years. FB doesn't even do a very good job of detecting fake accounts (I have a few active ones of my own).

They have access to a huge amount of data that Google don't.

The problem of detecting fake accounts is different from that of detecting fraud. Let say you have a probabilistic model that assigns a score to an account based upon how likely it is to be fake, what do you do with this information ?

To detect fake accounts you'd set a threshold which if you drop below a certain score you'd start to suspend accounts Lets say you're right 99% of the time, that still means you're going to suspend hundreds of thousands of legitimate users. Suspending a real account is far worse than letting a hundred fake accounts continue to exist, so Facebook errs on the side of letting fake accounts continue to exist (but they do for example delete likes from what they suspect to be fake accounts as that has a much smaller false-positive downnside).

However to detect click-fraud you can look at the scores across the range of accounts that are clicking on an ad. If you detect a high amount of activity from a group of users who are at your threshold level for being "fake users" you can apply a lot more sophistication to your click fraud model.

> Facebook has a much deeper level of expertise of telling a real user from a fake user.

If they do then they are busy looking the other way. Facebook is riddled with them (this is why you can buy thousands of Likes for very cheap).

So, am I the only one who finds Facebook ads...actually kind of good? Sure, they're horrifying in that they have the necessary information to target me that well, but I'll get advertisements for a local comic shop, or for a game that at least sounds interesting—although the product on the other end isn't always fantastic, I find Facebook ads to be the few that actually show me something I might be interested in.

I like them too. I use an ad-blocker (only on specific websites with incredibly obnoxious ads) but I make sure to allow them on Facebook. I don't click ads often but when I do it's usually on Facebook. For me at least they are very well targeted but my likes are well curated and I don't 'like' silly pages only actual things I like.

Last year, I bought quite a few Christmas gifts that I found via Facebook ads. I don't think I've ever clicked on a Google ad intentionally, but I've clicked dozens of Facebook ads. Pretty impressive, really.

You're clearly not the only one, but I've never seen an ad on Facebook for anything I was even remotely interested in. Mind you, that's mostly my fault, because I refuse to Like anything unless I can control the publicity that Like generates. I don't mind letting Facebook know I Like <X>, but I don't always want all my friends to know that.

It is interesting that Facebook is shooting itself in the foot by spamming on Likes and discouraging Liking, instead of using them to target user-friendly ads, which would br a virtuous cycle.

Yup, I find the ad targeting for my personal FB account to be actually quite good.

I find Facebook ads to be the few that actually show me something I might be interested in.

-- "Targeted online ads" are basically a myth. Problem is nobody <wants> to be a target.

This actually sounds like an unsurprising good news. Good because, provided those ads work well, it might create a sort of counter power against Adsense, which will likely benefit publishers and advertisers.

If Facebook gets to treat their publishers properly, as in, not like Adsense seems to do (automated account suspensions & all that), Google might start to see competition here.

Protect yourself:

AdBlock: https://chrome.google.com/webstore/detail/adblock/gighmmpiob...

Ghostery: http://www.ghostery.com/

Do Not Track Plus: http://www.abine.com/dntdetail.php#

Statements like this just sound a little slimy: Everything you do and say on Facebook can be used to serve you ads. Our policy says that we can advertise services to you off of Facebook based on data we have on Facebook.

This is an excellent example of why I love the paid SaaS model so much more than advertising. With a paid app, your customer is your user. With advertising, the customer is the advertiser and they have very, very different goals than the users.

That's actually a great argument in favor of SaaS I had never considered.

someone actually said it back in 2010

"If you are not paying for it, you're not the customer; you're the product being sold."

http://www.metafilter.com/95152/Userdriven-discontent#325604...

Well, Facebook already knows tons about you from keyword-scanning your private messages, analysing your FB usage patterns, "looking for friends" in your phone's contacts, remembering your GPS positions in photographs, etc. And they know where you've been on the net thanks to Like buttons and Comments widgets everywhere.

I guess this is the next logical step. I'm even more scared than I was by Phorm this time, though D:

So, why not just block all HTTP requests to anything on a domain owned by facebook unless you are actually viewing a FB page?

Yes, I use Ghostery (http://www.ghostery.com/) to do that.

There's Ghostery, of course - but I found it was extremely slow on my machine (as in, adding seconds of page load time), and while it is almost install-and-forget, it's policy is limited to what the maintainers believe. Everything else is "opt-out" with a GUI that's less than intuitive (or at least was, last time I used it - I haven't been following development in the last two years).

But if you are using Firefox, the real gem for security conscious people is RequestPolicy. The default setting is that every 3rd party access is opt-in rather than opt-out. And when you start using it, you'll realize that there are reasonable sites, but that every news site and many professional bloggers connect to 20 different tracking services each (scorecard, aquantive, google analytics, facebook, twitter, google plus, doubleclick, mediametrix, ... the list goes on and on).

Schneier's website, as a counterexample, only makes a reference to eff.org.

Also, you get to realize the depth of referral links - I see some newegg links (from e.g. fatwallet or dealnews) go through 10 redirects before arriving to the actual website. And that Google and Youtube track every single click on their site, even though they work very hard to make it look as if they send you directly.

Seriously, if you are security conscious, RequestPolicy is a must. It takes more work (e.g. a lot of sites rely on css and javascript from unrelated 3rd parties, and break horribly without them), but in return for 10 more minutes of work over a week, you actually have a good idea of who's trying to track you, and makes everything opt-in rather than opt-out or no-option.

Try RequestPolicy:

https://addons.mozilla.org/en-us/firefox/addon/requestpolicy...

Of course Ghostery and NoScript are also quite useful.

I still hope they get the legal and lobby aspects of fb:credits to work.

Using my facebook account (think iphone + facebook app + nfc) to do my daily payments would be a by far more qualitative businessmodel than ads.

Sure currently they are currently closer to sell ads than to implement an digital currency.

But ads is an misaligned business model. Facebook is about people engaging with their world. Liking an artist, checking in a store, listening to the album - next: buying the (collectors edition) album.

Yes i know apple is closer to becoming our digital currency (as they already do it since years). But having currency provider and gate to the internet (iphone) connected seems wrong. Currency and identity feels in a weird way more correct to me.

This will have marginal impact on Fb revenue for 2 reasons:

1. What people share on Facebook <> what people really want to buy\consume\order

People are trying to look nice on Facebook. Facebook has to come up with some non-trivial statistics. What those guy who liked SF Giants and Obama is willing to buy. This requires 'Hunch-like' insights. And we know that Hunch business model was not a big success. Google's exercise is much easier, becuase Google knows what user's looking for, privacy of search request helps a lot. This could be fixed in only one way - through introduction of search engine within Facebook. Facebook could acquire Blekko or hire bunch of people from Google\Bing.

2. Site owners will get higher CPM with Google than Facebook. And will prefer using Google ads in most cases, not Facebook ad.

This will happen for the same reason as N1, Google has higher advertising relevancy and offered price than Facebook. Facebook will be sucessful at niche sites only - like Zynga, junk sites that are blocked by Google, etc. This could work for brand advertising, with pay-per-view model.

This story is sensationalist and false. There is no external advertising network that Facebook wants to sell your data to. Facebook is changing this particular policy so that they can share data among its subsidiaries, like Facebook Ireland and Instagram. The "tracked changes" version of their data use policy [1] makes this clear on the last page (emphasis mine):

> We may share information we receive with businesses that are legally part of the same group of companies that Facebook is part of, or that become part of that group (often these companies are called affiliates). Likewise, our affiliates may share information with us as well. We and our affiliates may use shared information to help provide, understand, and improve our services and their own services.

[1]: https://fbcdn-dragon-a.akamaihd.net/cfs-ak-ash3/676592/128/4... (PDF)

I don't think this is the story's main point. If Facebook rolls out an AdSense-like product for publishers they're effectively building an external ad network (external as in outside facebook.com, not outside Facebook), right?

It does not matter if site already has any Fb services (likes, recommends, sharing)- Facebook callback could be easily added to any site together with advertisment module. It means that Facebook will deliver to ad module that ad that is most likely will be clicked according to site's user fb profile, likes, etc.

I don't know quite how common knowledge this is, but I think it's fairly well known that Facebook are piloting external ad sales outside of facebook.com, particularly on mobile[1][2][3].

So Facebook already uses external ad networks, and as they're buying up inventory from other providers some Facebook specific data is getting passed between various companies. The data isn't being 'sold' as such, but it is being tracked.

Currently this is mainly focused around getting Facebook app developers to advertise their apps through resold inventory

[1]: http://www.adexchanger.com/social-media/facebook-goes-wide-w... [2]: http://www.businessinsider.com/facebook-is-testing-a-product... [3]: http://www.adexchanger.com/social-media/facebook-tests-mobil...

Interesting to see Facebook's progression from a social network for students to an advertising network. This may actually be good for their shareholders, as social networking seems to have been unprofitable for them. Nothing lasts forever on the internet - except perhaps the text-only websites of professors on .ac.uk domains - and Facebook's future may be not as a social network, but as an advertising network. I'm speculating, but given the general shift (at least as I've seen) away from Facebook as a social network, changing their game might be the only way to stay afloat.

Facebook places much more value on its social graph than it really has. What your friends like and what you liked a year ago are mostly irrelevant at the moment you are browsing.

After all, it's been found that, as a generic ad platform, facebook ads are not nearly as effective as google's ad platforms. I bet that, over time, FB will have to make changes to their ad product to be more like AdSense. Or even worse, it could be like the facebook credits farce.

The natural place for these ads would seem to be on Facebook canvas apps. They already have those ad slots optimized, since Facebook shows their own ads outside of the canvas area. There is no competition from Google because Facebook does not allow you to use AdSense in the canvas area.

Yesterday as I was watching a video on Youtube, I saw a facebook banner ad (yeah "Ads by Google"). As I was logged into Facebook and Google at that time, the 'targeting' was pretty off. I would blame it on Google. Now probably facebook would have better intelligence. Let's see.

If anyone believes that Facebook isn't already doing retargeting based on cookies they are completely wrong. It isn't a publicly available feature for advertisers, but they do have it setup and running for specific partners.

That's not this is talking about, Facebook's dabble into retargeting is well known (http://techcrunch.com/2012/09/13/facebook-exchange-results/). The article is talking about an AdSense competitor.

I fear for google. This is probably going to demolish adsense.

Quite a big prediction there

Still doesn't solve the "intent" problem.

I doubt that people are going to "Like" erectile dysfunction Pages anytime soon.

> "Soon, Facebook ads could follow you around the web"

Not if I block them.

MySpace trajectory?)

The quality of Facebook ads is so shady that I fear this will bring nothing good for the users.

Speaking of wish the most common ads I get in Facebook are those where they trick people into agreeing to get expensive and recurrent SMS messages; like a parasite of your wallet. That should be illegal.

They're against Facebook's advertising policy, if you hover over the ads you'll get a little cross in the corner which you can click to report them.

I think Facebook ads on external sites have potential to be the most well targeted ads on the internet.

Currently, Google ads know about current intent (your search or the topic of the site you're browsing) but not much about you. Facebook knows a lot about you, but nothing about intent except that you're currently wasting some time on Facebook.

Soon Facebook will have both signals.

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