• CNET News.com and Various, Friday, November 2, 2007 11 AM

As Facebook prepares to wow the world with its new social advertising system, BusinessWeek reminds us of a startling reality: "the truth about online ads is that precious few people actually click on them." Worse, the percentage of those who do click on standard banners at highly trafficked destinations like Yahoo shrunk considerably in 2006--from 0.75 percent to just 0.27 percent, according to the advertising services firm Eyeblaster. So how, pray tell, does Facebook plan to reverse the trend?

"Data" is the word. Facebook believes the demographic, personal and social history data it collects about its 50 million members will prove to be an advertising goldmine for marketers. However, as CNET says, processing that data effectively is "a massive computing problem"--one that few companies apart from Google and Amazon have been able to master.

Which is why it's particularly bad news that Google, in enlisting MySpace, has now signed up just about everyone else in social networking for its OpenSocial development platform. With the user data open to all, per the OpenSocial initiative, "the company that can process the most data will win," says one tech insider. The smart money's on Google. Meanwhile, Facebook may have no other choice but to sign up for OpenSocial--but Fortune's Lindsay Blakely says Facebook wasn't invited by Google. How un-social.

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