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Facebook And MySpace Monetize Friendship With Targeted Ads

Facebook and MySpace, the two largest social networks, are giving advertisers better tools to reach their predominantly youthful audience.

A week after consumer groups asked the Federal Trade Commission to look into youth-oriented marketing at social networking sites, Facebook and MySpace, the two largest social networks, are giving advertisers better tools to reach their predominantly youthful audience.

At the ad:tech marketing conference in New York on Monday, MySpace said it would soon launch SelfServe by MySpace, a self-service system to buy display ads that's similar to AdWords, Google's text-ad purchasing system.

Chris DeWolfe, CEO and co-founder of MySpace, characterized his company's new ad system as "the first and only place" where small businesses can create display ads and target them to their customers. He noted that there are 23 million small businesses in the United States and that less than a million of them advertise online.

SelfServe by MySpace offers ad targeting based on geographic, demographic, and user interest data.

In a related announcement, MySpace also said that it had completed the first phase of another new ad platform, HyperTargeting by MySpace, which lets marketers target MySpace users with specific interests. The company claims that since July, certain brands saw "performance lifts of up to 300%" as a result of the service.

Also in conjunction with the ad:tech conference in New York, Facebook announced Facebook Ads, an ad system for businesses to present Facebook users with targeted ads in a social context that encourages customers to share marketing messages with friends.

Twelve major advertisers plan to use the system initially, including Blockbuster, CBS, Chase, The Coca-Cola Co., Saturn, Sony Pictures, The New York Times Co., and Verizon.

"With Facebook Ads, our brands can become a part of the way users communicate and interact on Facebook," said Carol Kruse, VP of global interactive marketing at Coca-Cola, in a statement.

Coca-Cola plans to invite Facebook users to add an application to their Facebook pages called "Sprite Sips," which will let them modify and interact with an animated Sprite Sips character. U.S. consumers will be able to access additional features of the advertising application by entering a PIN code found under the caps of 20-ounce Sprite bottles.

Facebook CEO Mark Zuckerberg characterizes social advertising as a growing trend. "Social actions are powerful because they act as trusted referrals and reinforce the fact that people influence people," he said in a statement. "It's no longer just about messages that are broadcasted out by companies, but increasingly about information that is shared between friends."

Privacy advocates offer a different interpretation of advertising through social networks. In their Nov. 1 complaint to the FTC, the Center for Digital Democracy and the U.S. Public Interest Research Group said, "Privacy considerations aside, the sheer betrayal of trust, as youth-driven communities are effectively sold to the highest advertising bidders, threatens to undermine the shared culture of the Internet."

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