Facebook filed for a $5 billion IPO and many financial institutions and investors are wondering how Facebook plans to justify that price. Luckily Facebook has answered the question already with ad targeting by in app behavior. This new feature was announced last year at F8 and has been quietly integrating itself into Facebook over the past few months through the open graph API as the Action Spec feature in the new Ad API. This  ad system will allow advertisers to target users based on their application specific actions, such as listening, reading, watching or playing, depending on what each application allows.

The ad system is still in beta, and advertisers with apps that take advantage of the new open graph api still need to wait for their app actions to be approved. Since the launch of the original 3 Facebook actions “read”, “listened”, and “watched” Facebook has added over 60 official sites and applications with custom actions. In the coming months, it’s expected Facebook will approve an exponential amount of new apps to use official actions for ad targeting.

This will undoubtedly increase the ROI of Facebook ads and allow Facebook to increase its cost per click and bring in more revenue to justify its initial IPO price. Facebook is looking to become as big as Google with its ad system, and definitely has the ability to do so with all of the personal data it collects from every user. Its a win-win-win situation: Facebook generates more revenue, advertisers can reach their target audience more effectively, and users will have more relevant ads related to their interests.