How Facebook's social ads use your friends' buying habits to sell to you

Ads use actions of one member in a social media group to promote products to others in that group

Online social networking major Facebook has received a patent in India for a social advertising innovation that leverages on the activities of a user's friends or groups on a social network website to promote products to that user.

In the patent specification filed with the Patent office, the company explains, "A social ad, for example, may inform a member that his friend/s has/have bought a particular product manufactured by an advertiser, or will attend an event sponsored by an advertiser, or has/have added a connection to a profile for a business or other entity."

The company claims that while advertisers generally lean on user information to display the ads, which are no different than targeting of ads that exist in other contexts, they have not yet been able to exploit the relationships and connections among members of a social networking website in a meaningful way to present their advertising message to consumers.

The social ads would enable advertisers to use one members' action to promote specific content to others who might be interested, not only because they might have similar interests, but also because of the connection or bonding with the member, it says. It would be more effective, as members would be interested in responding to a product or service so advertised, due to the enhanced credibility created, given that their friends have already bought it. The members' actions in third-party websites with different domains might also be added to the activity log in the social network websites, as they are shared by third-party websites.

The social network website, using the action logs of the member's friends and a database of ad requests, would apply a social ad generation algorithm to create one or more social ads customised for the targetted member.

The company also discusses various models for the social networking website to maximise advertising revenue through social ad.

Facebook has about 1.28 billion daily active users worldwide, with growth experienced in major markets such as India, Indonesia and Brazil, according to the company's latest quarterly results.The advertising revenue is generated by displaying ad products on Facebook, Instagram, and third-party affiliated websites or mobile applications. The advertising revenue during the three months ended March 31, 2017, for the company stood at $7.85 billion, up from $5.20 billion during the same period the previous year. User growth was more rapid in geographies with relatively lower average revenue per user (ARPU), such as Asia-Pacific and Rest of World, said the company.