Facebook's Long-Awaited Advertising Announcement: Behavioral Targeting, User Endorsements, Market Research Capabilities

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Facebook has begun transforming itself from an online hangout into an online business district.

Companies can now create their own pages on Facebook for the first time and target ads on Facebook based on what users and their friends buy and do online, under a new program announced Tuesday. Advertisers also will be able to show users their pitches in the guise of a friend's endorsement.

For example, if the friend just booked a vacation on Travelocity, the online travel agency will be able to display the friend's photo to entice the user to buy flights and hotel stays.