If you’ve been wondering how Facebook makes money, here’s a big demonstration of just how powerful a social network can be, in terms of mining market data. Facebook has just launched its mobile ad network, and the social network is offering advertisers the ability to target their campaigns based on user information and activity.

TechCrunch reports that Facebook’s new ad network is basically an ad-exchange layer atop a traditional mobile ad exchange. Advertisers bid for placements on the ad network and these get to pay depending on the demographic they want to reach.

Ads will be targeted using biographical data and social data, which includes age, sex, location, Likes, and friends who have used certain apps, among others. The ad network does not exactly disclose user-information, per se. The back-end synchronizes anonymous user IDs with ad-exchanges, which then use these data associated with that anonymous ID in targeting their campaigns.

For instance, a brand that caters to single women can be targeted at female Facebook users whose relationship status indicate they’re single. Or an ad targeting 16-35 year old males from only the U.S. can likewise use this data.

Facebook doesn’t think this will be an attack on privacy. In fact, a company representative says the ad targeting will even help improve user experience.

They could be an interesting way to discover new mobile apps and see relevant ads off of Facebook. With Facebook you have really great targeting. They’ll be able to reach people that are more likely to engage with the ads they see.

Ad-targeting is not exactly a new concept. Targeting advertisements based on demographic and interest is as old as the advertising industry itself. But technologies like Google’s AdWords and Facebook’s social network significantly increase the effectiveness of these by putting the campaigns into context. But while Google’s ad network displays ads based on the content being read, Facebook’s mobile campaign delves deeper into a user’s behavior and personality.

Do you think Facebook’s new ad-targeting service is infringing too much on user privacy? Or will you simply not mind having ads, especially if these are relevant to your interests anyway?