Amid fears for the company’s long-term ad revenue, Facebook is soon to change the way it sells advertising on its site. Not only will the site introduce a new “real-time” bidding process to advertisers, but marketing will soon be able to be sold for more targeted demographics, two changes that Facebook will be hoping can allow them to raise prices and keep revenue where they want it.
Bloomberg reports that the new process, called “Facebook Exchange,” will allow advertisers the chance to use browser cookies to more carefully track down their ideal audience and buy sidebar ads in real-time that would, ideally, reflect users’ current interests and browsing. The ads will be offered by third-party partners, including TellApart, Turn, Triggit, DataXu, MediaMath, AppNexus, The Trade Desk, and AdRoll, according to a Facebook spokesperson.
As AllFacebook has pointed out, Facebook Exchange represents a shift in company policy concerning cookies and tracking users; as recently as last November, the company’s founder Mark Zuckerberg criticized other websites for doing exactly what Exchange will, saying “If you look at companies, whether it’s Google or Yahoo or Microsoft, right, that have search engines and ad networks, they also have a huge amount of information about you. It’s just that they’re collecting that about you behind your back, really. And it’s like you’re going — you’re going around the Web, and they have cookies, and they’re collecting this huge amount of information about who you are. But you never know that.” Talking specifically about the targeted advertising model that Exchange is now to use, he added “you’re going to find people based on what they’ve browsed around on the Web and the people have little or no control over the information that a company like Google or Yahoo or Microsoft has about you.”
Clearly, now we can add Facebook to that list.
Michael Baker, CEO of digital marketing company DataXu, believes that the change is simply a matter of Facebook noticing the way ad evolution was headed. Writing for Forbes, he points out that, although Facebook’s existing ad models have been “enormously successful,” “exchange-traded media is up 7x since 2010. Add spend on AdX, Google’s exchange, is up 850% in 18 months.” With Facebook facing a dramatic slump in stock price since its IPO a few weeks ago and concerns that an increase in the site’s mobile use – where ads don’t show up in timelines – may mean a drop in ad revenue under its current model, it’s unlikely that the company could have genuinely avoided adopting the Exchange model or something similar for too long.
According to reports, Facebook Exchange will begin rolling out in the next few weeks.