Will Facebook Become the Operating System for Web Ads?

By: Carla Rover  Published: October 3, 2011

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As Facebook further opens up its ad infrastructure to third-party ad tech companies in an effort to leverage its sizable consumer database, the company is preparing itself to be a major player in the still-new field of programmatic ad buying.

Facebook's Open Graph now allows third-party companies to auto-connect their apps and services to Facebook through what Mark Zuckerberg has termed "frictionless sharing." This involves a one-time opt-in that permits third parties to pull user data and activities and stream it to Facebook. The goal appears to be that brands and content companies will begin to see Facebook as a distribution center for content, user data, and apps. Facebook would ostensibly offer easy, socially enhanced reach into a world of 800 million consumers to brands and solidify its position as a critical conveyor belt of data within the social universe.
This sets up Facebook, according to Blinq Media CEO Dave Williams, to become "the operating system for the delivery of ads on the Internet." Williams believes that Facebook will leverage its data to draw brands to eventually use its ad platform to create integrated ad service across mobile, display, search and even TV.
The key is data. If Facebook can host more user-behavior data as well as branded content and apps tagged with consumers' preferences, the company's ad sales are bound to benefit. Facebook is seeking to do what Google Plus might never be able to: get users to voluntarily have their personal information used for precise ad targeting.
The element of choice in data sharing is critical, as one of Facebook's core vulnerabilities is its privacy policies. Because it is a social network, it can die a swift, public death if consumers become sufficiently outraged over privacy issues or find a sexier alternative. The prerequisite opt-in for integrated sharing from services like Spotify, for example, also might not silence Facebook's most vocal critics, who are asking the FTC to investigate Facebook's adherence to its stated privacy policies. 
"Fortune 500 and Digital 100 brands — companies for which digital media represents hundreds of millions of dollars of spend – have a need for deep analytics and are looking to normalize workflows across multiple channels, not just social," said Joe Zawadzki, CEO of MediaMath, which recently integrated its self-serve demand-side platform with Facebook. "Facebook opening up its API is a recognition that its own user interface isn't going to suffice for the needs of a Ford or an American Express." 
According to Zawadzki, audience buying on Facebook is in a state of rapid change as the company begins to court brands by accommodating their evolving needs. "Programmatically buying, optimizing and analyzing ads on Facebook is much broader in scope than just display ads," said Zawadski. "Brands want reach but increasingly want engagement, and display and social can enhance each other when working together."