(moved from http://anuradhasivarajan.wordpress.com/ original date: June 18, 2012)
We are slowly unraveling answers on how Facebook is planning to leverage its 900 million users to streamline ads from being annoying distractions to pointers for what users actually want to buy. Here is how: Facebook is in the process of developing a real-time bidding ad system.
What is an Ad bidding system?
Digital advertisers manage ad exchange and data exchange accounts through what is called a Demand-Side Platform (DSP). Third parties integrate with these DSPs for better tracking of what we consumers are looking to buy, which in turn helps advertisers to leverage and increase the impact of their ads. Bidding then takes place within these ad exchanges and traffic is directed to websites and charged on the basis of pay per click models.
Why this is not new?
Having said all I did about ad bidding systems, let me also break it here that there is nothing new about ad bidding systems or pay per click advertising. Google started search engine advertising as early as 1999. Pioneered by Overture, now part of Yahoo!, we now have large pay per click providers today such as Google AdWords, Yahoo! Search Marketing, and Microsoft adCenter, all of which follow the bidding system.
So what is new?
While the idea behind exchange is not original, i.e. to show users more relevant ads, combined with Facebook’s 900 million stronghold and zealous user-ship, the targeting could prove to be more potent that regular search engine powered ads. In view of Facebook’s strict privacy protection policies in the past, this move is deemed as forward and aggressive. Having said this, Facebook is still not giving advertisers privileged user information. It’s just letting advertisers target users based on the data they generated while cruising around the Web.
The road ahead…
While Facebook Exchange is definitely a cause for celebration among investors, considering its share would grow more than the predicted 16.8% if it took off, it also means a paradigm shift in Facebook’s advertising mechanism. Would the next step be leveraging its immense database of biographical, social and behavioral information about a potential billion users?
We are slowly unraveling answers on how Facebook is planning to leverage its 900 million users to streamline ads from being annoying distractions to pointers for what users actually want to buy. Here is how: Facebook is in the process of developing a real-time bidding ad system.
What is an Ad bidding system?
Digital advertisers manage ad exchange and data exchange accounts through what is called a Demand-Side Platform (DSP). Third parties integrate with these DSPs for better tracking of what we consumers are looking to buy, which in turn helps advertisers to leverage and increase the impact of their ads. Bidding then takes place within these ad exchanges and traffic is directed to websites and charged on the basis of pay per click models.
Why this is not new?
Having said all I did about ad bidding systems, let me also break it here that there is nothing new about ad bidding systems or pay per click advertising. Google started search engine advertising as early as 1999. Pioneered by Overture, now part of Yahoo!, we now have large pay per click providers today such as Google AdWords, Yahoo! Search Marketing, and Microsoft adCenter, all of which follow the bidding system.
So what is new?
While the idea behind exchange is not original, i.e. to show users more relevant ads, combined with Facebook’s 900 million stronghold and zealous user-ship, the targeting could prove to be more potent that regular search engine powered ads. In view of Facebook’s strict privacy protection policies in the past, this move is deemed as forward and aggressive. Having said this, Facebook is still not giving advertisers privileged user information. It’s just letting advertisers target users based on the data they generated while cruising around the Web.
The road ahead…
While Facebook Exchange is definitely a cause for celebration among investors, considering its share would grow more than the predicted 16.8% if it took off, it also means a paradigm shift in Facebook’s advertising mechanism. Would the next step be leveraging its immense database of biographical, social and behavioral information about a potential billion users?
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