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Facebook Plans to Make Money by Selling Your Data

The Telegraph is reporting that social networking giant Facebook has new plans for generating revenue; offering its 150 million user database as a market research tool to corporations.

Starting this spring, companies will be able to selectively target Facebook’s members in order to research the appeal of new products through a polling system called Engagement Ads as demonstrated at the World Economic Forum in Davos.

The Evolution of Engagement Ads

Engagement Ads are not new to Facebook. Last year, The Wall Street Journal reported that Facebook had begun “quietly testing” the product in August and was hoping to roll it out by the end of November.

Engagement Ads, said the WSJ, would appear on the home page of Facebook when you first log on and prompt you to interact with an ad. If you did interact with the ad, Facebook would then attempt to share your action with your friends thus “getting the ad in front of more eyeballs.”

At the time, Chief Operating Officer Sheryl Sandberg said that ads systems are “built over time through continual tweaking.” She added that Facebook’s existing ad offerings were doing well but “undersell Facebook’s broader opportunity.”

If the Telegraph report is correct, Engagement Ads have had a massive tweak; companies will be able to pose questions to and receive feedback from selected members in real time based on user information that Facebook provides.

Randi Zuckerberg, Facebook’s Global Markets Director, told the Telegraph that companies are excited about this new polling system. “It takes a very long time to do a focus group, and businesses often don’t have the luxury of time. I think they liked the instant responses,” she said.

Facebook’s Advertising Attempts

Facebook’s foray into advertising over time has been weak at best. Forrester’s Jeremiah Owyang has called Facebook’s marketing toolset ‘confusing‘, adding that brands will only succeed with engagement advertising if they lean on user behaviors like communication, self-expression, and social exploration.

When Facebook launched it’s much hyped advertising strategy in 2007, we had hoped it would not be met with backlash. Unfortunately this wasn’t to be the case and the Beacon saga came to an end the following month with Mark Zuckerberg apologizing for the way Facebook had dealt with the situation.

It appears Facebook has run the gamut when it comes to advertising efforts. What began with fliers, display banner ads and even the very similar Facebook Polls have not yet inspired marketers to run in droves to the popular social networking site.

But could this be the year things turn around for them? Maybe. Change certainly is in the air at Facebook. Zuckerberg had noticeably dressed up for Davos, telling blogger Robert Scoble it was to denote that this was Facebook’s ‘intense’ year. The Facebook founder bio page has had a recent addition. And as for Engagement Ads? Well, we’ll just have to wait and see. What do you think?

Update:Facebook has contacted us and said that the technology demonstrated at the conference was not a new service and that there have been no changes to the company’s existing polls and Engagement Ads services. We’ll made a new post later today to discuss why the prospect of this new service has raised so much interest and concern. See Why a Facebook “Sentiment Engine” Would be Huge

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