"What we're talking about is very new--the ability to make [marketing] decisions based on user interests," Levinsohn told investors and analysts at Merrill Lynch's Media & Entertainment Conference on Tuesday.

After more than six months of testing, MySpace is ready to implement its "interest targeting" technology on a broad scale, said Levinsohn, allowing brand advertisers to target consumers based on the information each shares with friends and family on a regular basis.

The algorithms designed by FIM's "monetization technology group" initially separated MySpace members into 10 categories representing key interests--such as autos, fashion, finance, health, sports, and video games. Along with standout keywords, the algorithms determine ad placement based on a member's groups, friends, age, gender, and prior ad engagement history.

The 100-employee team is now busy expanding the initiative into the "hyper targeting" phase by breaking the 10 main categories into hundreds of subcategories from which advertisers can choose.

"This is just the beginning for us," Levinsohn said, envisioning a time when advertisers can easily drill down from entertainment lovers to movie buffs, to "Fantastic Four" freaks, to Jessica Alba admirers, and so forth.

Along with greater monetization opportunities, Levinsohn was candid regarding the forces driving innovation at MySpace. "I want to compare and contrast with Facebook," he told conference attendees on Tuesday. "We've never really had a direct competitor with MySpace."

A competitor indeed. Traffic to Facebook grew a phenomenal 117% over the past year, according to Nielsen//NetRatings. By contrast, MySpace grew 23% year-over-year as of August. That month, Facebook drew 19.1 million unique visitors, about a third of MySpace's 60 million.

Facebook also recently began preparing a highly targeted ad system powered by the personal information provided by its members. Sometime this fall, the privately owned Facebook is expected to begin implementing complex algorithms, which can predict members' receptivity to ads.

Appealing to advertisers, Levinsohn noted some positive usage trends. MySpace members, he said, presently visit the site 30% more often than Facebook members. Also, MySpace users spend an average of 28 more minutes per month than Facebook users, he said.

Facebook, however, is hardly the only Web site that MySpace is challenging with its new ad targeting system.

According to Levinsohn, each of MySpace's ten interest categories reach at least 3 million users. Therefore, it can now achieve a greater concentrated reach in the automotive category than car marketplace Autobytel, and a greater reach in fashion than Cosmo and Glamour.

"Nobody else can achieve this concentrated reach," Levinsohn said.

In the auto category at least, MySpace's new targeting technology has improved the likelihood that members will click on ads by 70%.

Levinsohn, on Tuesday, did not mention the national advertisers who have been testing its new technology.

By November, FIM is expected to launch an automated system for mid-sized advertisers to target desired consumer categories. With the service, it will provide advertisers with various response data.

To fend off criticism from privacy advocates, MySpace is also expected to let members opt out of its new targeting program.

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