San Francisco/New York: Facebook Inc. plans to introduce real-time bidding for advertising on its site, a technology used by Google Inc. and other Web firms to more effectively target ads to consumers.
“The service, Facebook Exchange, will let advertisers reach specific types of users on the social network based on their browsing history,” Annie Ta, a company spokeswoman, said in an interview on Wednesday. “Prices will be based on the cost per thousand viewers and spots will be sold via third-party technology partners. It will debut within weeks.”
Facebook has tumbled 28% since its stock market debut last month, a decline caused in part by concern that ad revenue growth isn’t keeping pace with surging membership. The company brought in $3.15 billion (Rs 17,580 crore today) from advertising last year and has introduced mobile ads and other services to boost sales.
The firm “is hoping to use that inventory on the right side of the page to deliver advertising that is more targeted”, Debra Aho Williamson, an analyst at New York-based eMarketer Inc, said.
With Facebook Exchange, marketers will be able to target people who have perused certain kinds of websites in the past based on cookies, or small pieces of code, that can track activities on the Web. For example, users who have visited travel sites to research trips to Hawaii may later see a promotion on Facebook about hotels in Hawaii.
An increasing portion of display ad sales are driven by this type of technology. Real-time bidding will account for about $5.08 billion, or 27%, of the projected $18.9 billion to be spent on American online display ads in the US in 2015, according to researcher IDC. Last year, real-time bids generated $1.07 billion, or 9.8%, of display ad sales.
Facebook’s shares rose in extended trading on Wednesday, after earlier falling less than 1% to $27.27 at the close in New York.
The company’s technology partners for selling ads based on user browsing patterns include TellApart Inc., Turn Inc., Triggit, DataXu Inc., MediaMath Inc., AppNexus Inc., the Trade Desk Inc. and AdRoll.com, Ta said. Facebook has started placing cookies on the Internet browsers of its members, which will be used by its partners to identify members of the social network, Ta added. While there isn’t a way to opt out of this tracking on Facebook’s site, the outside vendors will give users an opportunity to block cookies.
The new bidding process is designed to help advertisers deliver more time-sensitive messages. Advertisers now target users on Facebook based on the interests they list in their profiles and the pages they “like” on the site. The firm will continue to offer these ads, and such interests won’t be used as part of the real-time bidding exchange, Ta said.
As its stock declines amid concerns about sales growth, Facebook has been working to show advertisers that its website is an effective way to reach customers.
Brian Womack in San Francisco and Lisa Rapaport in New York contributed to this story.