The logic, of course, is that if users keep posting content and links within Facebook, they might not have to look to Google to find what they need. The Altimeter Group's Charlene Li told eWEEK:
"What Facebook is doing is surfacing a lot more of that human expertise. You can go out and actually tap peoples' expertise, their experiences and their past transactions. I can go and see who has bought, amongst my friends, the Palm Pre, and poll them and ask them what they think. That allows me to customize and really get the things I need done much more efficiently because it's more attuned to my needs. "
But how does Facebook make money from this glut of personal information? The popular consensus is that behaviorally targeted advertising is the key and Google, Microsoft and Yahoo are all hungry to claim a slice of this pie Facebook is trying to bake. Google started along this path in March.
Such ads would target customers based on the information in their user profiles, but users have thus far been loath to agree to what they view as an intrusion on their personal lives. Users want to be chatty Kathys with their friends, share applications and connect in other ways, but it has yet to be proven whether they want ads tailored to them based on their Web services use. Exhibit A: The difficulties of Facebook's Beacon targeted ad campaign.
Li said she entrusts Google and Facebook with her personal data and wagers that others out there will, too. The key is pushing the right buttons to get people to grant access to their data. Web promotions may be the key, said Li, noting that "people will give away their privacy for free shipping."
Even so, Gartner's Andrew Frank told eWEEK that Facebook still has a fundamental problem exploiting its data for high precision behavioral advertising while maintaining the loyalty of its user base.
Cracking the behavioral targeting nut is key for attracting brand advertisers, identified as the prize for which these rivals are competing. For example, Frank said BT has shown value in targeting "in market" consumers who are in the consideration process for a purchase with what brand advertisers would call "direct response ads," or those ads that lead directly to a sale.