Facebook Takes Step Towards Social Ad Network

The problems Facebook had with its IPO offering were widely reported with share prices rapidly dropping after a series of technical glitches.

However, aside from the technical problems at the start there are other reasons why Facebook is suffering. Whilst it is easily the king of social networks with more users than any other, more games and the continual development of new features, it is lacking in a number of areas.

One key area which worries investors is that Facebook does not yet have a proven revenue generating advertising model. However, it appears this may be changing after Facebook started running adverts on Zynga.com earlier this week.

The adverts look exactly the same as those seen on Facebook and whilst this doesn’t sound like much it is in fact a major step forward. It represents the first step towards an advertising network which would allow Facebook to deliver adverts with social context to sites across the internet.

A successful ad network would bring in a significant amount of revenue for Facebook, especially as it would allow for the targeting of web surfers with adverts relevant to them.  At present Facebook hasn’t commented on whether it is planning to launch a full ad network but the possibility is definitely there.

Last month Facebook changed its privacy policy so that it can show users ads based upon their personal data but outside of Facebook.com.  The only comment so far from Facebook is that “Facebook ads and sponsored stories may now be shown on Zynga.” They go on to say that they do not share any information about people or advertisers with Zynga.

It is likely that this represents the beginning of a serious attempt by Facebook to appease worries over its future revenue and it would not be surprising if we start to see Facebook ads across more websites in the near future.