There's news that Facebook is releasing a new version of its Ad Conversion tool for advertisers to see how well their placements are going. Interesting stuff, if you're an advertiser. But the back story is huge: It shows that Facebook is now trying to tackle Google head on.
Basically Facebook is enabling its advertising partners to get the detailed low-down on the return on investment they're getting from ad placements on Facebook—the tool allows you to "track activity that happens on your Web site as a result of someone on Facebook seeing or clicking your Facebook Ad." Activating it is simple: You just enter the tool, activate a new tag, grab the associated Web code and paste it into the Web page that anyone clicking on the ad will arrive at. Facebook then does all the clever behind the scenes analytics to work out who's clicking what and when, and will deliver you reports that outline the effectiveness of your ads. Which you can then, of course, tweak to achieve a more optimum effect.
Facebook's testing this out with select ad partners at the moment, but it won't be long before it'll be available to all of them. But are you thinking this analytics tool sounds a tad familiar? You're right: It's very much a parallel to Google's system inside Analytics and AdWords.
This new tool is the next step in a carefully orchestrated plan by Facebook to try to rival Google in the online ad-placement game. The previous step happened just last week, and you may have missed it if you're not involved in the business: Facebook brought control of its display advertising back in house, after being partnered with Microsoft for several years. The two Net giants had been working together in a three year deal—just expired—in which Microsoft controlled the serving of ads on the social network, and provided search engine links from Facebook's search bar. The search results on Facebook will remain partly connected to Bing, but the ongoing deal between MS and Facebook excludes regular display advertising on profile and fan pages.
This is a sign that Facebook is in a strong enough position to take control over its own ad revenues, without splitting them. This strength comes from its ever-soaring membership figure, and it places Facebook in an excellent position to challenge Google in the online ads market. Google's got over 65.7% market share of online ads and paid out over $5 billion to advertising partners last year through the AdSense system—which gives you some idea of the heft of the company. A heft that's only going to get bigger, as some reports suggest Google could see a growth of as much as 40% in its ad market this year.
Facebook's maneuvers couldn't have come at a better time, then. This is a multi-billion dollar market that Facebook will be keen to master, and as we indicated yesterday, Google's new Buzz social tool is an extremely powerful advertisement targeting device, and may help Google expand its ad business into every corner of the online world, particularly on mobile devices. It's also a step into the social networking market dominated by Facebook. It looks like Facebook's happy to take the fight right back to Google's primary business model, though, and with 400 million active users it may have a chance to seize some of the online and mobile device advert market before Google totally sews it up.