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As a result of its partnership with Microsoft last October, Facebook has integrated a Live Search box that lets users search the Web in addition to searching within Facebook’s own walls.

This can have some unique local benefits, according to the Facebook blog:

By integrating web search into Facebook, you can increase the information available to share with your friends, family and coworkers on the site. For example, your friend may invite you to an event at a new restaurant. Without leaving Facebook, you can check out the details of the restaurant on the web.

These searches would seem to open up more opportunities (inventory) to serve local ads from Facebook’s SMB ad programs, which were discussed by Facebook’s VP of operations, Chamath Palihapitiya, at TKG’s ILM:07 conference.

In the meantime, Live Search ads have already been served throughout Facebook for larger advertisers, via adCenter. The addition of Web search offers additional context and inventory — through search volume — to serve ads within the social network.

The fusion of search and social networking also raises the potential for qualifying search traffic and inventory based on the dynamics of a social network. In other words, this viral environment and people’s influence on one another can be used to qualify inventory. This isn’t an explicit part of the Live Search integration, but it could be coming soon. Google has already begun to talk about doing something similar as part of its Open Social initiative.

Serving ads within social networks has been a tough nut to crack. But we’re seeing lots of experimentation and getting closer to some answers.

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