Report: Facebook may be solving that little 'revenue' problem
Throughout Facebook's recent and meteoric rise, one of the detractors raised by skeptics has continually been the social networking site's failure to show concrete proof of a strong revenue model.
But that all might change very soon.
According to a report on the Wall Street Journal's Web site, the social network is "quietly" assembling a new advertising model that will take advantage of the copious personal information that its members post on their profiles. These new advertisements would not be in the form of traditional graphical advertisements but would rather pepper the "news feed" of network activity, closely monitored by Facebook members who want to see what their friends have been up to.
"People familiar with the plan say Facebook wants to accomplish what Google Inc. did with AdWords, which lets anyone place ads next to search results by buying "keywords" online," the Journal's Vauhini Vara wrote. Considering AdWords was an arguably revolutionary step in Internet advertising, this is potentially a very big step for Facebook. This hazy new advertising model would let marketers take advantage of the fact that members of the social-networking site share not only basic data like their date of birth, gender, and ZIP code; but also more targeted data like favorite bands, notable quotations, and occupation.
Currently, much of Facebook's advertising revenue relies on a deal with Microsoft. There's no word on what this amorphous new advertising model would do to affect that partnership.
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos. E-mail Caroline. 
http://www.speedmediablog.com/2007/08/22/stacking-up-facebook/