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Facebook's New Ad Play Built on The People

Today in New York, Facebook CEO Mark Zuckerberg introduced Facebook Ads, an advertising platform that he claims will redefine the conversation between marketers and consumers. If it lives up to half the hype, the system will deliver what online platforms have been promising for years, but so far haven’t produced.

It's no secret that marketers have been salivating over the tremendous amount of highly personal information that Facebook's 51 million users have voluntarily compiled on neatly packaged profiles; the big questions all along have been how to monetize that tailor-made data and to what degree such a system would compromise members' privacy.

Today, Zuckerberg inched closer to an answer with the introduction of a program that will connect businesses with users and target advertising. Alongside Zuckerman were executives from companies that will partner with Facebook on the new venture, including Blockbuster, CBS, Coca-Cola and, of course, Microsoft.

Facebook did not return a request for comment, but in a statement, Zuckerberg said Facebook Ads represent a new way of advertising online.

"For the last hundred years media has been pushed out to people, but now marketers are going to be a part of the conversation. And they're going to do this by using the social graph in the same way our users do."

Facebook Ads is divided into three parts. First, companies can build their own profiles, just as individuals do. So far so good, as more than 100,000 new Facebook pages appeared today to promote products, companies and other organizations, according to a statement.

Second, the Facebook Social Ads system will allow advertisers to tap into the viral flow of information in the Facebook ecosystem to serve up ads with what they hope will be a new level of relevance.

Finally, the free Facebook Insights service will provide metrics and analysis on the performance of a company's profile.

The second element of the program, Social Ads, is a somewhat scaled-down, less invasive version of the revolutionary killer app that many industry observers had been expecting.

Ads will bounce around Facebook through its social graph, the Venn diagram of infinite dimensions through which a band, say, can produce and distribute a hit single without ever cutting a deal.

The popularity of a company or brand will build as users interact with its Facebook page. When users become a fan of that page, they can pass it along to their friends as a trusted referral.

The innovation appears to lie in the fusion of social action with advertisements. In this context, Facebook said, a "social action" includes something that expresses a consumer preference, such as purchasing a pair of shoes or writing a review of a CD. Advertising messages will be tagged to these expressions of preference that users share with their friends, forming Facebook's high-tech take on word-of-mouth marketing.

The ads would appear either in a user's News Feed or on the left side of the page, the column that is already reserved for advertisements.

Social Ads will also incorporate favored Facebook apps such as Walls and News Feeds, as well as any other add-on that the business opts to include.

While privacy groups and even some Facebook users might be less enthusiastic about the data-gathering scheme, the company promises that marketers creating Social Ads are not privy to any "personally identifiable information."

Though Facebook's announcement may not be the game-changer that had been anticipated, there is no doubt that Zuckerberg feels that the endeavor is recasting the dialog between advertiser and consumer.

"It's no longer just about messages that are broadcasted out by companies, but increasingly about information that is shared between friends."

The answer to the question that he raises -- will Facebook users accept companies as their "friends" -- remains to be seen.