SocialMedia is an ad network that partners with Facebook widgetmakers and serves ads to their users. It decides which ads to serve based on information those users agree to release to widgetmakers when installing their apps — information like who they're friends with and how they interact with them on Facebook. Also using that information, SocialMedia sometimes puts the faces of users' friends in the ads, calling these ads "Social banners." So far these ads appear only in widgets themselves, but they could be distributed across the Internet. We're not concerned about the privacy issues, because they're boring and for old people who might not even list themselves in the white pages, let alone overshare like a good millenial. We do wonder, however, if SocialMedia will make money.
The company's founder, Seth Goldstein, is obviously bullish, telling Inside Facebook that "social banners tend to perform at approximately 2-4x the rate of traditional banners, depending on the social content within them." Borrowing language from Google, Goldstein credits the performance to an alogorithm he calls "FriendRank."
If two of your friends recommended a movie to you, one of the two recommendations is going to have a higher psychological impact. FriendRank determines which of these two people should be presented to you in order to maximize the effectiveness of the ad for the advertiser, and the relevancy of the ad for the user. People have, on average, 150 friends. It’s not enough to just stick some of them in ads. You have to know who the right friends are, and that’s what FriendRank determines
It all sounds like what Facebook and Mark Zuckerberg should have done with Beacon, right? It's what we thought Facebook's SocialAds were going to be before Facebook launched them. But an executive at one of the more popular widgetmakers preaches caution: "[We're] not persuaded yet. Seth is good at spin, less accomplished at shipping real products that customers desire."