Facebook challenges Google in Web advertising

Facebook's (FB) new Internet-wide advertising platform represents a direct challenge to Google (GOOG) and to other companies in the advertising technology space.

The relaunched service, called Atlas, is designed to help companies target consumers across PCs and mobile devices. The social networking announced system on Monday at the beginning of an annual advertising conference.

Atlas could prove to be a significant threat to competitors because of the massive stores of information that Facebook keeps on its users. The platform could also help Facebook build a significant new revenue stream. For consumers, meanwhile, they could find themselves being trailed online by ads on computers and mobile devices.

Atlas was rebuilt from technology that Facebook bought from Microsoft in 2013. At the time, Facebook reportedly said that it did not intend to launch an ad network. Instead, it said marketers could "close the loop" to better understand the effectiveness of their campaigns.

Technically, that still seems to be correct. Facebook emphasizes that Atlas partners with ad platforms for search, social networks and video. In addition, Atlas works with publishers and so-called demand-side platforms that allow marketers to manage ad placements with multiple advertising networks and collections of networks, called exchanges.

What Atlas does is introduce ways of tagging ads that tie back to Facebook's ever-increasing store of personal information. The data would be an important resource in behavioral marketing, in which advertisers use information about what consumers do on the Web to gain insight into their online habits.

The techniques are similar to the National Security Agency's use of consumer metadata, which is useful in determining what and when people do things. By noting the characteristics of activities, analysts can learn about people's interests and individual circumstances, such as whether someone is fighting cancer or is graduating from college.

In other words, Atlas is simply the latest Facebook effort in tracking the activities of users across the Internet. The company's ubiquitous "Like" button amounted an early first step to compile information on user preferences, even when they weren't expressing them directly through the social network. Then came Facebook's "social graph" to online searches, which extended its knowledge of people's online behavior.

Not only does Facebook have voluminous metadata, but it can monitor and parse all posts on its services, giving it even more knowledge about consumers. All the additional activity of targeting, serving ads and measuring results will likely feed back into what Facebook already knows, increasing its informational lead over competitors.

In comparison, Google and other companies are largely restricted to the information available through interactions on the Web. They lack the opportunities a Facebook has to observe consumers in real time.

Of course, Facebook is far from the only technology company seeking to compile a thorough online dossier on what people do on the Web. A growing number of startups are working to pull together information from a variety of sources, including social networks and e-commerce sites, to know what people say and buy.