By David Needle
June 6, 2008

Instead of worrying about employees spending company time on Facebook, some enterprises may soon have reason to encourage the idea.At a conference on consumer services and applications in the enterprise here on Thursday, a Facebook executive confirmed the social networking giant has big plans to make its service more accessible to corporate users.

“One area we’ve seen a lot of value for the social graph is in the enterprise because it’s a completely different way to envision an HR system or CRM,” said Chamath Palihapitiya, vice president of marketing and operations at Facebook. “A handful of large companies have expressed interest in seeing how it would work because organically at least 50 percent of their employees are already on Facebook.”

Facebook’s interest comes at a time when companies like Socialtext already offer “enterprise-ready” social networking tools that include corporate-friendly enhancements, such as extra security and audit features.

But even if Facebook is late to the enterprise party, Palihapitiya said the company remains well aware of the opportunity.

“We see it as one of the single long-term areas of value creation,” he said during his presentation.

In an interview with InternetNews.com, Palihapitiya added that Facebook doesn’t plan to be building enterprise applications. Instead, it wants to make sure developers can leverage its platform to bring Facebook in through the front door as a company-sanctioned application.

“We’re interested in working with enterprises and making sure we understand their needs,” Palihapitiya said. “We want to enable other developers to use our platform to develop for the enterprise.”

He also said the company is working with enterprises to develop some reference examples of Facebook services for the workplace.

Already, Salesforce.com has helped marry a bit of Facebook to the enterprise with the Faceforce application available through the SaaS giant’s AppExchange, an online catalog of Salesforce-ready applications.

Faceforce pulls Facebook profile information into Salesforce CRM. For example, this allows a salesperson to see a prospect’s birthday, favorite movies, books, sports team and contacts they might have who are already customers.

How much information is pulled in through Faceforce depends on how much the user includes in his or her public profile. Clara Shih, director of AppExchange product line management, developed the application.

Will ad-supported apps fly?

Palihapitiya specifically mentioned Faceforce as an example of forthcoming applications that leverage the social network platform. But he also said Facebook is exploring ways to extend its ad-supported model into the enterprise — or at least, to give developers the option.

“We want to be agnostic, based on what we can enable,” he said.

Those comments led to a spirited debate with other panelists dubious about whether ad-supported model will work. “Ads in the enterprise are extremely unfeasible,” said David Thompson, CEO of Genius.com, a provider of online tools designed to help salespeople track prospects.

Thompson said the issue of ad-supported software for business had been debated for years at WebEx, the online conferencing company where he previously served as chief marketing officer.

“No one wants it, certainly not corporate IT,” he said. “I say it’s doomed.”

Palihapitiya replied that writing off the idea was “rigid” thinking, adding that instead of becoming an impediment to productivity, the latest ad-targeting technology can deliver ads that are highly relevant to the user, based on where and who they are.

“When the right company weaves all this together for the enterprise, that will be the proof point,” Palihapitiya said.

He conceded that a strict focus on relevancy won’t lead to “trillions of impressions, but will reach lots of qualified users.”

Thompson also questioned how a Facebook developer might go about matching users to appropriate ads: “So, you just need to rifle through everyone’s data?” he deadpanned.

But Palihapitiya replied that such applications already exist, and don’t involve scouring users’ data.

Shih, the Faceforce creator, said in a later interview with InternetNews.com that she’s likewise skeptical about the appeal of ad-supported applications in the enterprise.

“Customers have told me they’d be willing to pay for a premium edition of Faceforce that included support and help with configurations,” she told InternetNews.com. “Businesses have a budget for these things and it doesn’t add much to operating costs. If I can pay X amount of dollars per year to not have ads, I think that’s a no-brainer.”

Ross Mayfield, chairman and co-founder of Socialtext, told InternetNews.com that enterprise customers want a higher level of customization and vendor support than a free or ad-supported application company typically provides.

“Some companies come to us and say, ‘We love Facebook, but we want it behind the firewall’,” said Mayfield, whose firm provides a number of social networking features within the corporate network like Wikis and tagging of profiles.

“And they say, ‘If we don’t deliver it, the employees will use it anyway and that’s a security hole for us,’” he added. “They’re looking for alternatives.”

As a result, it’s not surprising that consumer-originated incumbents like Facebook are scrambling to avoid losing out to those alternatives — particularly with a vast sum of money on the line.

“Enterprise applications are a $10 billion opportunity,” said Kevin Efrusy, a venture partner at Accel, a co-sponsor of the half-day, Consumerization of Software conference, along with SD Forum.

If you’re ever annoyed by the at-times howlingly inappropriate ads on Facebook, there’s now an easy way to express your disapproval — users can vote for or against the small “social” ads that appear on their sidebar.

This addition should benefit users and advertisers. Despite being based on information in a user’s profile, those sidebar ads are pretty hit-or-miss. The new feature means I can tell Facebook that I’d like to see fewer annoying relationship network ads featuring images of bikini-clad women, and more cool, creepy ads for Twin Peaks. It also gives companies another way to measure whether their ads are well-received and effective, which is particularly important at a time when everyone’s still trying to figure out the social advertising business model.

The feedback system could also encourage users to pay more attention to Facebook’s advertising. After all, my current habits involve ignoring those ads as much as possible. But as I gleefully gave thumbs-ups and thumbs-downs to a whole series of ads, I kept thinking, “Wow, I’ve never noticed that one before.”

Facebook hasn’t made any official announcements about the feature, and right now all I see is a simple up-or-down voting interface. Rob Webb, who was probably the first blogger to write about this, has screenshots of a more detailed feedback system that asks why users liked or disliked a certain ad. I’ve emailed Facebook for clarification, but haven’t heard back yet.

Update: And here’s what Facebook spokesperson says:

Facebook regularly experiments with site changes in an effort to continually improve the user experience. The feedback tool for Facebook Ads that you noticed is currently available to a portion of site users. We are evaluating the response to the tool and considering whether to make it more broadly available.