Ignoring the perfectly good solution we cooked up in Valleywag Labs, AdBrite and Ad Chap went to market with products for Facebook applications yesterday. AdBrite cofounder Philip Kaplan told CNET that the company already powers the ads on popular apps such as iLike and Zombies. The program is supposed to help tailor those ads better for the social environment. Google is working to do the same thing for developers using AdSense on their apps. Ad Chap's service, itself a Facebook application, is entirely new. Why it's unlikely to work? Ad Chap charges advertisers per click, but doesn't offer any targeting. For right now, there's a proliferation of ad networks on Facebook, but we suspect Darwin will soon cull the herd.

Google's system for placing ads on other websites, AdSense, is experiencing a significant bug at exactly the wrong time. Microsoft has dominated media coverage all week with its investment in Facebook, with the promise of precisely targeted ads. Meanwhile, the search giant has been toiling since last Friday to resolve errors in how AdSense reports ad "channel" data since Friday. ("Channels" allow publishers who run AdSense to track ad performance in detail.) Google's silence has done little to assuage the complaints of AdSense users. Google's only comment came on Monday from the quasi-anonymous "AdSense Advisor":

"Is GOOG Shafting Its AdSense Partners?" Yes. Next question? Google paid out 2 percent less — from 78.6 percent to 76.7 percent — of AdSense revenue to partners this quarter compared to last. [SiliconValleyWatcher]

Josh Kopelman sold Half.com to eBay in 2000. Since then, he founded First Round Capital and sold StumbleUpon for $75 million, again to eBay. BusinessWeek's Kerry Miller got Kopelman to complain about three ideas he tired of seeing from startups.

Has Facebook already cut a deal with Google? A French blog notes that Facebook, locked in negotiations with Google, Microsoft, and Yahoo for an investment combined with an international-advertising deal, is already carrying Google's AdSense ads. It could be a test to see if Google's ads are lucrative enough to be worth the terms the search giant is offering — or just a stopgap measure to make money before a formal deal is struck. [Adscriptor]

After Terry Semel abruptly resigned as Yahoo's CEO, founder Jerry Yang promised precipitous action — the hackneyed "100-day plan." But now, we hear that his new strategy is anything but swift in execution. Codenamed "Project Apex," the solution to Yahoo's woes centers around building a better version of Google's AdSense. AdSense, of course, is the service that places ads on third-party websites, matching the ads to their content. Yahoo already has a similar service called Yahoo Publisher Network, but it's "a clusterfuck," according to one Yahoo insider. The only problem? Yahoo's tech team thinks they can finish it in three years. Three years! (What's the average tenure of a Yahoo executive today? Will anyone be around to see this through?)

Success has a thousand fathers, and failure is an orphan — unless you can somehow spin an adoption tale into the mix. That seems to be what Marissa Mayer is trying to do. In a recent interview, Marissa Mayer tries to take credit for both Google's Gmail email service, as well as AdSense, the immensely profitable system which places Google-sold ads on blogs and other independent websites based on their content. Her claim over AdSense? She didn't kill the product outright, despite her fears that it would be "creepy." But she also reveals that Paul Buchheit, the Googler who burdened the company with "don't be evil" as an unsheddable corporate motto, is the true inventer of a system that matched ads to a Web page's content — whether that content is a blog post, an email message, or anything else.

Microsoft is unleashing its Content Ads program on August 26, opening up what has until now been a small beta test of a system that targets ads to the content of Web pages. Now all U.S.-based advertisers will be able to place ads via Microsoft's Content Ads, which hopes to do for Microsoft's MSN websites what AdSense has done for websites partnering with Google: Blanket them in context-sensitive, keyword-based advertising. While many speculate the Content Ads program will put Google and Microsoft in close ad-selling competition, and foster advertiser-friendly price and technology wars, Microsoft still has a lot of catching up to do in market share. AdSense is already widely deployed across the blogosphere, and has become the default business model for unimaginative startups everywhere.

Seth McFarlane, creator of the hilarious animated series "Family Guy" has just hooked up with Google, using its AdSense network to distribute original video shorts. The show, which will be paid for, McFarlane and Google hope, by embedded ads, will appear in banners Google serves on both its own and independent sites. The notion is that as ads, the videos will reach a larger audience than a website dedicated to the clips. For Google, it's a way to fill unsold ad inventory and prove the notion of AdSense as a distribution vehicle, after a similar deal with Viacom's MTV Networks collapsed. And it could also have a long-run benefit for Google. By inserting content into ad banners, Google could be, in essence, retraining users to pay attention to the Web commercials they've long learned to ignore.

Associated Content, the startup backed by top Google sales executive Tim Armstrong, is controversial because of accusations — hardly denied by CEO Geoff Reiss — that the company is gaming AdSense, Google's system for placing advertisements on other websites. Specifically, Associated Content pays bloggers to write articles on niche topics designed to attract lucrative ads. The problem with the scheme, of course, is that Google's advertisers are interested in placing ads on relevant, high-quality websites, not pages ginned up solely to make a buck. But what's most suspicious about AC is how well, and how quickly, it pays people to gin up those articles.The blog AllSux.com recently reviewed AC along with competitors Helium and Triond. AC's distinction: Rather than just paying per pageview, Armstrong and Reiss's company pays bloggers upfront. What's the big deal about that? For that business model to make sense, Associated Content must have a very good idea of what keywords are worth, letting it predict how much AdSense revenue a given article will generate. And that suggests that Associated Content has hacked Google's algorithm, reverse-engineering it to profit at Google advertisers' expense. Not a very seemly activity for Armstrong to preside over. How much longer will Google, which up until now has sanctioned Armstrong's side venture, allow it to continue?

We're starting a countdown: How long before Google ad-sales executive Tim Armstrong either leaves the search engine, or leaves the board of Associated Content, the startup he's helping to launch? In his day job, Armstrong sells ads which appear on Google's own websites, as well as sites in its AdSense ad-distribution network. Associated Content, meanwhile, pays bloggers to write lightweight articles on niche topics, in what most observers believe is a cynical attempt to reap profits from Google's AdSense advertisers. AC CEO Geoff Reiss, whom Armstrong hired, admits as much to News.com. Read on for the damning quote which may end Armstrong's cozy arrangement for good.

Mahalo, Jason Calacanis's new search-engine venture, uses Google's AdSense system to target ads to its content. But in placing the ads, Calacanis got a bit too chummy for Google's comfort. Mahalo's website cheerily informs users that the ads that appear are placed by "Our Friends at Google." Oh, really? We asked Google if the search engine was really best-friends-forever with Calacanis, or what. Here's what we heard back from Jason's supposed friends.

Someone has apparently ripped the Google logo off the wall of its Santa Monica office. Much like Google ripped off the idea of AdSense, the system for targeting ads to websites' content, from the Santa Monica-based startup Applied Semantics, which it later bought. (For the record, Valleywag deplores any and all ripoffs.) (Photo by coneee)

Susan Wojcicki, an early Google employee and sister-in-law to founder Sergey Brin, is a liar. In a puff-piece profile of Wojcicki and her Menlo Park house, whose garage served as Google's first office, a USA Today reporter lazily transcribes the claim that Wojcicki invented AdSense. AdSense, of course, is the system that places Google ads on other websites, and generates billions of dollars in revenue for Google. But Wojcicki didn't invent it.

Last month, a South Korean joke/entertainment site called Humor University (certainly not to be confused with College Humor!) engaged in a tiny sideshow of legal threats versus Google over the search giant terminating their Adsense account. Google claimed there was some clickfraud chicanery going on with the Humor University account, which HU disputed. Unfortunately for Google, the issue got much larger, irritating, and potentially costly.

The Korea Fair Trade commission ordered Google to rewrite its Adsense contracts this week, removing provisions that allow Google to unilaterally terminate the agreements. Such action is considered unfair under Korean law. This has emboldened Humor University to move forward with its lawsuit asking for 20 million won (about $21,000), the amount HU claims it is owed for its Adsense account. HU president Lee Jung-min doesn't plan to sue for punitive or related damages, saying "The litigation is not about money, but about our self-esteem." Google hurt their feelings more than anything else, you see. If successful, copycat lawsuits will no doubt come in from all over South Korea, which could result in Adsense getting crippled or pulled nationwide. Who, then, will provide income to thousands of crap websites about anime characters and nubile Asian chicks?