• by Laurie Sullivan  @lauriesullivan, August 13, 2009

Facebook Director of Monetization Tim Kendall tells Online Media Daily that the social network plans to aggressively go after ad dollars by proving to businesses that it has what it takes to reach consumers through contextually targeted ads. Does the success it has seen with targeting open the door to paid search in the near future?

The number of brands advertising on Facebook has tripled within the past year. There are more than 300,000 pages, of which 100,000 are produced by small and medium-sized businesses. Roughly 83 of the top 100 U.S. advertisers have advertised on Facebook, and tens of thousands of active online advertisers are using the Facebook Ads system.

"We can do a better job generating demand because of the time people spend on the site," Kendall says, suggesting that matching ads with the mounds of data and photos that members put in their profiles on the site can provide advertisers with a higher ROI. "We are well positioned to really pull a lot of the offline demand-generation dollars on to Facebook."

The average member has 120 friends on the site. More than 5 billion minutes are spent on Facebook each day, worldwide. More than 30 million users update their status at least once daily, and more than eight million users become fans of pages each day, according to company statistics. The site is awash in data, and the new real-time search features introduced this week open intriguing possibilities, although the company is not selling search terms just yet.

Kendall says Facebook allows advertisers to tap into four key sources of data when contextually targeting ads to members. Similar to Google's ad targeting model, which ties into search term queries, Facebook's primary source for contextual keyword targeting comes from member profiles.

The second source comes from groups that members join or fan pages. Status updates, such as "I'm hungry for pizza," and public wall posts are also considered. "There's nothing controversial about paid search targeting" in general, nor the type of user targeting in which Facebook engages, he says. "The controversy comes in when a user's behavior without their knowledge is tracked across the Internet, which is not something we do."

Kendall insists Facebook's tools are better than any behavioral targeting platform, where a cookie is dropped on a user's computer, and follows the person's behavior across the Web, serving ads based on the information.

Kendall says businesses have success without BT. Take, for example, CM Photographics of Woodbury, MN. The wedding photographer runs radio ads in its local geographic area, but also has a page and ad match campaign on Facebook, where it targets women age 24 to 30 with the relationship status "engaged." Kendall says, "that's a degree of marketing efficiency you can't get offline."

Think targeted ads, especially with 1.1 million women in the United States on Facebook with the status "engaged." In more than 12 months, CM Photographics generated $40,000 in revenue from a $600 advertising investment on Facebook. Of the Facebook members directed to the Web site from the ads, more than 60% became qualified leads, and actively expressed interest in more information.

Companies that allocate budgets to paid search also run a variety of demand-generation campaigns offline. That's money that belongs online, Kendall says of the demand-gen dollars. And he thinks Facebook can do a better job with the money.

"You can find a whole set of customers on Facebook that aren't searching for your product or service, but could become a customer if you got in front of them," he says.