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Google and Microsoft Court Facebook for Advertising Deal

The Wall Street Journal this morning is reporting that Microsoft (MSFT) and Google GOOG) are both pressing Facebook hard to close an advertising deal that would give the winner the right to broker ads for the site outside of the U.S. in conjunction with its planned international expansion. WSJ believes that the deal will also come with a nice little minority stake in the startup, which has been valued at as much as $15 billion.

While it’s not surprising that all the big boys want to get it on with the belle of the social networking ball, the question is, will they know what to do once they score?

Facebook is not the Internet — it’s a more intimate environment, a gated opt-in social community of loose trust networks. Clumsily inserting the standard keyword-based advertising model may not be effective. Users are already trained to ignore the usual ad placement areas on a site, and if a tide of tacky ads floods Facebook, we could see an exodus of users seeking virgin territory.

On the other hand, the relationship management aspects of Facebook could provide an unprecedented opportunity for innovation in advertising, if Google or Microsoft is up for it, but it will involve an evolution which, so far, neither company has demonstrated. Imagine leveraging the power of the trust networks to personalize recommendations, to draw lines between users, and further strengthen the bonds they already have with one another, promoting the social aspects of the site rather than disrupting them. Here’s where all the little Facebook apps could become supremely useful. “Your friend Jack sent you a mojito for Happy Hour. Thank him — with a BACARDI mojito!”

It will be in Facebook’s best interest to choose a dancing partner wisely — one who will take care of what’s important, and not muck things up with two left feet.

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