Fresh from a $240-million (U.S.) cash infusion - from Microsoft, no less - that hung a $15-billion market valuation on the company, social-networking site Facebook recently unveiled some new "social advertising" features that it hopes will help justify that astronomical (and so far, theoretical) market value.
The new features include Social Ads, which allow companies or individuals to create advertisements that are targeted at specific groups or demographics within the social network, and Facebook Pages, which allow companies or groups to create their own dedicated hubs where they can connect with users.
The third leg in the social-advertising stool is one of the most interesting. It's called Facebook Beacon, and it effectively tracks the online behaviour of users - those who specifically choose to take part in the service - not just within Facebook but elsewhere on the Internet as well.
When someone buys something at Amazon, for example, that information is recorded through the use of a tracking cookie, and can then be broadcast to the person's friends on Facebook. In effect, it becomes an advertisement, but it is inserted into the "news feed" that Facebook users get from friends.
Depending on your perspective (and whether you are a user or an advertiser) this might strike you as either a little creepy, or a stroke of genius (or perhaps a bit of both).
In many ways, what Facebook is offering is the holy grail for advertisers: a form of advertising that doesn't really seem like advertising.
Advertisers like to say that a properly targeted ad isn't really an ad at all, it's information. If you're in the mood for a movie and someone recommends one, you're more likely to see that as a worthwhile opinion rather than an ad.
And when it comes to Facebook Beacon, the potential is even larger. Virtually everyone agrees that the best ad is a sincere recommendation from a trusted friend. Unfortunately for advertisers, those are difficult to come by - and unpredictable. But what if you could produce them more frequently?
The idea behind Beacon is that if I'm browsing or shopping online, my behaviour is transmitted to my friends instantaneously and it gets mixed in with all the rest of their news feed items about how someone has uploaded new photos, or changed their status from "married" to "it's complicated."
In other words, it becomes a subtle recommendation rather than an overt advertisement.
If some portion of Facebook's 50 million users can be persuaded to behave in that way, the theory goes, then the potential advertising benefits are enormous.
Interestingly enough, Microsoft's deal with Facebook doesn't involve the "social advertising" end of the network. The software giant gets to handle the more traditional advertising on the site - the banner ads and skyscrapers that Web surfers have become familiar with. But you can bet that Microsoft will be watching Facebook's new experiment pretty closely.
There's no question that advertisers would be ecstatic if they could get your friends to advertise products and services to you for nothing. But what if they can't? What if Facebook users revolt at that kind of blurring of the line between friendship and advertising and decide not to take part?
The risk is that "social ads" will distort the nature of the Facebook experience, and prompt users to seek greener, ad-free pastures elsewhere.
At the launch of the site's new advertising features, Facebook chief executive officer Mark Zuckerberg effectively said these kinds of services are the price users have to pay for what is still a free service. But will enough users believe that the price is worth it?
That's the $15-billion question.
