Tonight we had the opportunity to check out some of the applications that Facebook is actively testing advertisements on. We’ve also included a screenshot of some of those advertisements below. So far Facebook is advertising on three Zynga applications (Heroes vs Villains, Special Forces, and Word Twist), the We’re Related application by FamilyLink, and one other unnamed developer who’s ads are in beta.

Currently the advertisements are similar to the ones you’d see on the sidebar except that the layout is a bit more horizontal. The key value addition is of course that these ads will be targeted just like their existing ads. Many ad networks that I’ve spoken to have been exploring developing their own targeting systems but in many cases doing so appears to be pointless now that Facebook has entered the game.

Granted, the ads are currently only tests but it’s an extremely strong statement from Facebook who at one point suggested that the existing advertising networks were sufficient at filling developer inventory. Facebook has gone ahead and created a wiki page with a list of third party advertisers that can help monetize applications which is clearly a smart political move on Facebook’s part but there are a few networks that should definitely be concerned.

Is it game over for all of the Facebook ad networks? Most definitely not. There are plenty of ad networks that are not competing directly with Facebook. “Affiliate marketing” ad networks like Offerpal and SuperRewards (both sponsors of this blog) will continue to thrive for the time being because they provide extremely high CPMs for developers and Facebook is not competing. There are also gifting ad networks and payment platforms that are doing very well and will continue to.

For many other ad networks that are in the general Facebook advertising space Facebook has now become a direct competitor. The only remaining business that Facebook hasn’t publicly stated that they are getting into is the cost-per-install space but theoretically developers can always bid on Facebook ads. Additionally, Facebook has extremely strict advertising policies compared to application ad networks and ads like “You have (3) unread messages in your inbox” aren’t going to fly.

For any developer ad network on Facebook, things just got a bit more complicated. At this point it has become a CPM battle and I’m sure Facebook wouldn’t be getting into this space if they didn’t think they could compete. It will most definitely be interesting to see how this pans out.