• TechCrunch , Wednesday, March 4, 2009 12:15 PM

Earlier this year at the World Economic Forum in Davos, Switzerland, Facebook Chief Operating Officer Sheryl Sandberg told TechCrunch to expect "the evolution of the advertising products" at Facebook this year. TC writer Erick Schonfeld notes that already, Facebook has embarked on the path of creating its own AdSense-like social ad network by combining Facebook Connect and Facebook Ads.

Schonfeld cites two unnamed sources that have direct knowledge of the product integration, who say that it's all part of the larger plan outlined by Sandberg earlier this year. Meanwhile, Facebook's expansion into third-party territory continues. Just last month, the social networking giant began testing ads for the first time on third-party application pages. It also added a new commenting widget for sites that use FB Connect, which is beginning to look like a layer on which third party apps will soon be built.

As Schonfeld says, "the more real estate those apps take up, the more room there will be to insert an ad or two." These ads will initially appear on FB Connect real estate as opposed to traditional advertising spots, where the likes of Google AdSense ads appear, which is probably smart, Schonfeld says, given how poorly Facebook ads perform on its own site. At most, he says expanding Facebook's real estate to third parties "would create better returns by letting Facebook place highly targeted ads in different contexts where people may be more receptive to them." He adds: "This is the next evolutionary step in online advertising. It is only a matter of when, not if, it will occur."

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