Now Facebook squares up for Google fight

Social network site looks for ways to make smart use of people's data to boost advertising revenue

Facebook is working on a revolutionary online advertising plan that executives believe could allow the social networking phenomenon to take on Google.

Founder Mark Zuckerberg is preparing to float Facebook in a move that could value the group at $100bn, but that would still make it only half the size of Google. The two are fierce rivals, particularly since the launch of social network Google+ last year.

Facebook has been revamping its advertising to try to commercialise the business. Around 85 per cent of its $3.71bn revenue now comes from online advertising, though this is expected to soar as the social network site looks at new ways for big brands to reach its 845 million users.

The company has announced a push into allowing advertising on its mobile phone app, which is currently ad-free. About half of the site's followers access it on the move.

Deep in Facebook's Californian base, product engineers are working on a system that would help advertisers to deploy the data gathered on users more widely. In simple terms, if someone has their Facebook page open in one browser and surfs the web in another, data could be taken from the social media site and an advert tailored according to their preference would appear in the search engine.

A source close to the company said: "This is something talked about internally and a 2013 launch has been mentioned. If Facebook knows you're a Manchester United fan and the search engine or publisher also knows your identity, then you will get adverts for Man U products."

Before introducing the technology, Facebook would have to sign deals with search engines and online publishers and split the revenues.

Google uses similar data to tailor its advertisements, based on what people have searched for, rather than their preferences and interests – the sort of information that Facebook possesses.

Facebook would have to placate critics that say the site and other similar online giants could breach their privacy. But, if Facebook can calm these nerves, experts believe the move could double the size of the business overnight.

Simon Mansell, the founder of a UK-based Facebook ad builder, said: "This would be a game changer for Facebook and would let them take on Google, at least in terms of revenue."