Fred Wilson has a post today entitled "It's Time To Open Up The Feeds To Marketers".  In it  he says the online experience is increasingly being built around "feeds" like the one found in Facebook and that marketers should be allowed to exploit that for highly targeted Ads.  He further believes these marketers won't want to do business with each individual feed provider which opens an opportunity for a company to step in and be an "Ad broker". 

Here's a quote from Mr. Wilson...

So what we need to happen is the web services that render these feeds for us; google reader, netvibes, friendfeed, twitter, outside.in, facebook, etc, etc need to provide api accesss to these feeds to services that will serve marketers who want to get their messages targeted into them.

The targeting is the key and I am not entirely clear how this should work. In the case of search driven feeds, it should clearly be keyword based. In the case of geo feeds like outside.in, it should be zip code or neighborhood based. In the case of things like facebook or google reader, I think the targeting is more likely to be behavioral.

Mr. Wilson concludes his post by saying his venture firm would be interested in funding a company that provided such a service. 

Here's the thing, if someone really wants to try this than more power to you.  But in my opinion, it's a waste of time and resources.  Here's why...

The inherent problem is that both the Feed Generator (Facebook, Twitter, whomever) and the Advertisement Provider have conflicting interests.

These "feeds" that Mr. Wilson refers to aren't like web pages that use Adsense.  They often contain very personal information and because of that they represent a trust between a feed generating service and the people who use that service.

Handing that personal information over to a 3rd party ad provider would certainly be a violation of that trust (as has already been proven).

That brings you to the Ad provider.  They could, in theory, allow the feed generator to submit just the information needed to customize ads.  Then an ad could be created based on that info.  But in doing so they'd have to trust the Feed Generator to provide accurate information which puts a huge question mark on their service.

How effective can a service that tailors Ads be if that service doesn't control a vital part of their process?  More to the point, how can they hope to sell Ad space if they can't guarantee a certain level of accuracy?

It becomes a no win situation in the end.  Either the feed provider has to compromise privacy or the Ad provider has to compromise effectiveness. 

In my opinion this is a situation where people are turning to tech for a solution that business people are more qualified to solve.  Better to let each feed provider control their own Ad policy and allow advertising firms to sell that space in various packages (like is done with Print, Radio and TV now).  Then would be advertisers still wouldn't have to deal with every provider.

I love tech but it isn't necessarily the solution to everything.

For the Record...If I was going to do this (try to be an Ad Provider) I'd probably make a Javascript library that could be given to the Feed Generators to run internally.  That way they could run it themselves and not have to compromise their user's privacy while still using my algorithm to generate the results on which ads would be based.  With that said, this approach still leaves a question mark (since the process can't be verified by the Ad provider) and forces the Ad provider to give key Intellectual Property to their customers (who could then pick it apart if they so desire).