We stopped by the office of a source who is plugged into the ad tech industry the other day.
On a white board, he drew for us a diagram that he says illustrates Facebook’s next $10 billion opportunity.
We took a picture:
Here’s a slightly more readable version we just drew:
An explainer: Right now, Facebook only sells ads on Facebook.com. These ads can only be targeted to users based on data they gave Facebook about themselves – their “likes” and their profile information. That’s the top left quadrant.
In the bottom left quadrant, our source wrote “FBX,” which stands for Facebook Ad Exchange. Through the Facebook ad exchange, which is in beta right now, advertisers will be able to buy ads on Facebook.com and target them using both the same Facebook data described above AND data about users provided by third-party sources.
Right now, Facebook says it will build this exchange, but our source thinks Facebook will eventually acquire New York-based ad tech platform AppNexus and plug it in, instead.
Our source says Facebook’s next $10 billion business (which would be its first) takes place in the top-right quadrant. In this business, Facebook will sell ad inventory on third-party sites and target it using its own data AND third-party data.
Our source calls this business “FaceSense” because it will compete with Google’s ad network, Ad Sense. Ad Sense does about $2.5 billion in revenue per quarter; hence our source’s $10 billion figure.
So, buy it?