Google's stepping up its social networking efforts with new features for Friend Connect today, and the features provide some clues as to how Google thinks social data can be used to make money.

Friend Connect provides a way for website owners to give their site social features without having to build an entire social network from scratch. This type of add-on social network tool has been increasingly popular in the last year and a half--Friend Connect competes with offerings such as Facebook Connect, which was announced around the same time, in the first half of 2008. Google says that about 9 billion web sites use Friend Connect, and that the service receives about half a billion unique page views each month.

The new Friend Connect features collect more data about a site's visitors and provide several ways to use it. A polling gadget gathers information about visitors' interests, which is then shared between sites.

Using this feature, a music site could find out which bands are their viewers' favorites, and a fashion site could discover a user's favorite clothing brands. A new direct messaging feature also allows Friend Connect users to contact others with similar interests. The music site could, for example, send newsletters targeted to users who've expressed an interest in certain 90s grunge bands. Or visitors might be served links to the most recent articles about these bands.

But perhaps most importantly for advertising dollars--and one must always remember that Google is an advertising company at heart--user profiles come with an integrated set of tools that a site owner can use to provide personalized information, ads, and services.

Most conveniently, Google has now integrated AdSense with FriendConnect, allowing site owners to fine-tune the ads displayed based on users' interests, as well as site content.

Google's vision of advertising has always been about presenting ad content at the moment people are actively seeking such information, and the company has always employed sophisticated analytics to do this.

FriendConnect's new features look like a solid step toward monetizing social data. While social networking sites still struggle with this--users of those sites are usually looking to socialize, and not to buy things--FriendConnect's advantage is that the social data can be used to catch users when they're looking for useful information or even thinking about making a purchase.

The video below demonstrates the new features.

It's been a rocky road, but Microsoft and Yahoo have finally come to terms on an Internet-search partnership. The 10-year deal will help stabilize Yahoo while giving Microsoft a better chance of building a successful Web advertising business to rival that of its newest nemesis, Google.

Under the terms of the deal, Yahoo will use Microsoft's revamped search engine Bing on all its websites. Yahoo will also license its own search technology to Microsoft, to incorporate in Microsoft products if it chooses. In return, Yahoo will handle advertising for both companies and will receive a whopping 88 percent of search revenue over the first five years.

Once combined, Microsoft and Yahoo will have a 28 percent share of the search market. This only slightly narrows the gap with Google, which still dominates with two-thirds of the market. But the deal will help Microsoft gain ground on Google in other ways.

In the short term, Microsoft will instantly grab a much bigger audience for Bing. This will attract more Web advertising and should help the company's engineers further refine the search engine's underlying technology.

Over the longer term, it's an important strategic maneuver for Microsoft as a business. As more and more key pieces of software move online, as well as the operating system itself, Microsoft is faced with a steady erosion of its traditional sources of revenue--licenses from companies and individuals. So it's vital for the company's future to build a lucrative business on the same foundation as Google.

What it all means for Yahoo is much less clear. The company will obviously gain short-term financial stability, but it risks becoming less relevant as an Internet business.

Most worrying for Google, perhaps, is the fact that recently Bing has been getting very positive reviews. Not only that, but a recent study from online advertising company Chitika claimed that Bing users are 55 percent more likely than Google users to click on advertisements after reaching a site. If that's true, it could help lure more Web advertisers away from Google and over to Bing.

Can Google conquer television? Yesterday, I talked with Keval Desai, product manager for Google's TV Ads unit, and he did a pretty good job convincing me that it can.

"TV is becoming like the Web," Desai says. From an advertiser's perspective, he has a point. In the 1980s, a popular TV program like The Cosby Show might have captured half the viewers in the entire United States; today's most popular shows, like American Idol, are lucky to capture a fourth of the whole audience. The difference is that there are dozens of channels now, each catering to a different set of viewers. As Desai notes, this is a lot like the Web: the audience is out there, but it's split into small bits consuming a wide variety of content.

So Google's TV Ads system works much like AdWords. An advertiser selects keywords and sets a spending limit for each day (per thousand people who see the ad). The system then figures out where and when the ad should be placed. Google is borrowing another trick from Web advertising: a soon-to-be-launched feature that lets advertisers search for shows based on audience demographics (a feature inspired by Google's search-based ad targeting).

The service is clearly aimed at a different kind of television advertiser. In addition to a simplified user interface, TV Ads includes instructions on how to visit Google's marketplace and find someone who can help make an advert. Indeed, Desai says, the plan is to draw in advertisers who don't normally put ads on TV and, as a complement, bring ad dollars to networks that don't normally have broad recognition.

The TV Ads interface already lets you select target shows based on audience age and gender information, which is in turn based on data from a partnership with Nielsen. But Desai told me about a partnership that will take this farther. A satellite-TV company called Echostar, working with credit-reporting company Equifax, will cross-reference shows watched (using its own data from set-top boxes) with income and buying habits (using Equifax's data). This will let Google offer shows to advertisers that will reach, for example, people with household incomes greater than $100,000. Desai stresses that all this data is made anonymous, so it certainly won't be possible to target specific households with ads.

I wonder how long we'll have to wait for that.