August 13, 2010, 2:40 PM

Facebook Open Graph helps the social network learn about its users

That knowledge translates into better targeted ads.

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 Facebook Open Graph, a series of plug-ins that retailers and other sites can use to weave the social network throughout their sites, could transform the way advertisers advertise, suggests a new report by digital marketing firm OneUpWeb.

The report, “The Facebook Fallacy: Open Graph=Google Killer,” says that by gathering data from both within its site and the broader web, Facebook is able to present a consumer with an ad targeted to one of his specific, niche interests. “Say, for a gardener, an upcoming flower show in the area,” the report says.

Unlike Google, Facebook doesn’t have to wait for the user to search “flowers.” The ad is displayed when the user logs in because Facebook already knows the consumer’s interests. 

Those ads can be extremely powerful, particularly since 46% of social networking users connect through Facebook—both on the site, as well as on sites such as Yelp, as they move around the web, says the report. That means there’s a wealth of trackable relationships, says the report. And with more than 500 million active user profiles, Facebook has plenty of consumer data.

Social networks, such as Facebook, are particularly powerful because they can leverage a consumer’s connections. A recent study by ClickZ found that 81% of respondents received product recommendations from friends and followers—and nearly 75% of those consumers said that advice influenced their buying decision.

Marketers can put that data to use in many ways. In a survey of marketers, the potential effects of Facebook’s efforts include:

  • Better demographic targeting on social networking sites or community sites, 27%
  • Better ways of measuring return on investment, 25%
  • Better targeting of influential consumers, 19%
  • Better contextual targeting with customer-created content, 19%
  • Better measurement of brand metrics, such as brand awareness or affinity, 18%
  • Better measurement of the reach or word-of-mouth effect of viral campaigns, 16%
  • More consistent measurement and reporting across sites, 15%

Because of the potential power of Open Graph, the report suggests social marketing spending, which was $4 billion a year ago, soon will boom. The report expects spending to rise 87.5% to $7.5 billion this year and to reach $38 billion by 2015.

“The ground is shifting and we are on the cusp of a new digital marketing revolution,” says the report.

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