As a private company, Facebook doesn’t have to share public numbers, but a spokesman told Wired.com that advertisers are getting comfortable with Facebook, and it has thousands of advertisers. Revenues are estimated at $1.3 billion a year and rising, while investors and secondary markets are valuing the company at more than $40 billion on Sharespost, a private stock market.

      That despite the fact that Facebook founder Mark Zuckerberg has never loved ads. He kept them off his site as long as he could, and even the ones that run now are relatively small, given how big and loud ads have gotten on the Web outside of Facebook. Some marketers complain that the Facebook ads just aren’t visible enough on the site, so they concentrate their efforts on getting people to “fan” their pages, in hopes the news that you like “Starbucks” makes it into the news feeds of your friends.

      Facebook says it’s not working on any third-party ad system, and right now, it doesn’t need to. It’s flush with cash from investors, who’ve poured hundreds of millions into the company, without Zuckerberg losing control. It can bide its time, making Facebook even more central to the internet, building more relationships with top advertisers and convincing more sites to turn over their login systems to Facebook.

      But it’s a near inevitability Facebook takes the same, logical step Google took and starts putting ads on third-party sites, targeting Facebook users reading the Washington Post, The Daily Beast, or your hometown newspaper.

      Those ads could be splashy and dominant – the way advertisers like them these days, without distracting from the Facebook experience. They can also be very targeted, without Facebook having to hand over the info about that reader to the website.

      It has the potential to be the opposite of Google’s Adwords/Adsense division, with huge profits coming from outside the Facebook walls. Facebook could then grab a giant and dominating slice of an evergrowing online display ad market, while simultaneously making display ads actually targeted.

      Facebook even makes the case that its ad system is less creepy than third-party systems that track you, mostly without you realizing it, around the web. While they do see what you are doing around the web when you are logged into your Facebook account and there is a “Like” button on that site, the company says it does not mine that information and deletes it after three months. No other third-party ad network comes close to forgetting so soon.

      Facebook’s advantage is that they probably don't need to do this sort of tracking, given all the profile data, friend connections and likes that you’ve fed into their system. If advertisers and users get comfortable enough with ads based off that data, then there’s no reason that a site such as the New York Times wouldn’t want to turn over at least some of their ad sales to Facebook. Having spent years getting advertisers used to targeting the Facebook generation, Facebook would be able to charge very high rates to advertisers.

      That’s because it would not only be able to do very granular ad targeting, but it could do so on a site with the reputation of the New York Times.

      Online papers love the idea of targeted ads, because contextual ads just don’t work for news. What ad are you going to put up next to a story about a flood in India? An ad for Indian rugs? What about next to a story about a plane crash? Or even a story about a run-of-the-mill mayoral election?

      One hope to fix that giant problem facing the media industry is to know who your readers are.

      And that means building identity into the internet.

      Facebook’s the only company to have done so, and that’s why Google is fighting to catch up to “social.”

      There may not be room for more than one online identity company on the net, but Google has assembled a high-powered team of coders and thinkers, including Slide’s Max Levchin, the open social evangelist Chris Messina and Live Journal’s Brad Fitzpatrick Plaxo’s Joseph Smarr, to take on the Facebook crew.

      As the underdog in this fight, Google’s best weapon will be openness — tying to turn users against the walls of Facebook, while Facebook will try to be just open enough to keep users and partners from revolting. The best case scenario? Google figures out how to turn identity into an open protocol like e-mail — something you can host and control anywhere that lets you stitch together whatever services you like.

      And if that effort fails, Facebook’s relatively benign child-king will be in control of what you can and can’t do with your identity on the internet.

      And Mark Zuckerberg will have built a company worth more than $100 billion — and maybe worth more than Google.

      Update: The post originally named Brad Fitzpatrick as part of the Google’s team focused on social apps, but he’s working on Android. Joseph Smarr, formerly of Plaxo and part of the Open ID movement, is working on social, however.

Souce from ANALYSIS

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