Are social ads getting too much? Try “FriendRank”

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SocialMedia, a San Francisco company trying to find compelling ways to advertise on social networks, is offering advertisers a new product: Something called “FriendRank.”

The company scans data about your activities on Facebook and other social networks, infers who your best friends are, and ranks them. Then the company exploits that ranking to serve you relevant ads.

It does so with something it calls “social banners,” which insert references to your best friends within advertisements.

The idea is that showing you ads that reference your friends will attract your attention and thus make the ads perform better.

I sat down with SocialMedia cofounder Seth Goldstein last week, who told me that the response rate to standard display advertising on social networks is abysmal. People click on ads about 0.02 percent of the time, he said, because people have started ignoring ads.

Thus the deperate need to interject your friends — to knock you out of your efficient browsing routine.

CNET uses the following example of a movie advertisement to explain how it works. Instead of simply showing you the movie ad, this product invites you to interact with the movie by inviting you to contact your friend about it.

[The] social banner would ask which of your close Facebook friends, among a short list, you’d like to invite to see the movie. Or a social banner might inform you that a friend Jim just ranked Iron Man with three stars, and it might ask to “click here to buy tickets at Fandango.”

See image below, which shows the example of an ad, with friends on the top right.

The word FriendRank is a play on Google’s PageRank, which became the breakthrough technology in the late 1990s to rank Web pages in results when you searched for things on Google.

The word FriendRank is not new. Notably, former Yahoo employee Jeremey Zawodny was talking about “FriendRank” more than four years ago; it’s also notable that Zawodny has gone to Craigslist, an advertising company well-known for its dismissal of Web 2.0 hype. Will Zawodny help Craigslist cook up something in the social advertising arena? Don’t know. But Zawodny, back four years ago, used FriendRank to focuse on the concept of “influence,” as opposed to simply who your “closest” friend is. It’s clear that sometimes you can be influenced by friends who aren’t that close but who you perceive as being more hip or important.

SocialMedia’s execs say FriendRank will look for positive reinforcement. If you tend to click often on an ad featuring a particular friend, that friend’s ranking rises within SocialMedia’s algorithm. Also, someone you don’t interact with at all won’t be part of your FriendRank. While your parents may be influential in your life, if they don’t interact with you much on Facebook, they won’t count for very much in SocialMedia’s algorithm.

SocialMedia finds out information about your friendships by watching who you play games with on Facebook or MySpace, or who you otherwise communicate with using other applications on those networks. SocialMedia is in a good position to get this data because it serves ads on hundreds of applications, which in turn can access certain profile data of the people viewing the pages.

The company said it has filed a patent on the algorithm it uses to aggregate interactions on social networks to determine what friends to display in its ads.

I’m unaware of any competing products. Facebook has used its own news feed to display advertising to users and is said to be working internally on using your friendship network to serve ads, but it hasn’t offered any feature with an explicit friend ranking like this. Myspace, in turn, offers what it calls