You’ve heard it here first, ad retargeting is going to be the next biggest step in internet advertising since the advent of the banner ad itself–and a company that’s struggled to monetize its 175 million member base is sort of jumping on that bandwagon.

Arrington puts it best:

One of the reasons ads perform so poorly on social networks is because they are the worst place to show someone an ad. People on social networks tend to be in a socializing mode instead of a shopping or information-gathering mode. But if you show the same people an ad on another type of site (say, a clothing ad on a fashion blog), and you can target that ad based on their social profile (you know their age, gender, and where they live), that in theory should be a formula for better response rates.

Having worked in online advertising, I still claim to the belief that unsolicited banner ads are pretty much worthless 92% of the time, but with specific demographic data that should lower that to about 90% useless..then again if you want to advertise clothing, a fashion blog should already be high on your list, and demographics needn’t matter all that much.

Then again, if you’re advertising on a site like say CNN, which has a somewhat more diverse demographic, this could prove to be a fairly useful model.