June 14, 2012

What's Facebook's Plan to Draw Big Advertisers? An Ad Exchange.


Recent days have been less than smooth for Facebook, as big advertisers like GM have been pulling their paid ads and instead focusing on the social media marketing concept that Facebook helped launch.

But recent announcements from Facebook say they're not taking this lying down, and have a plan to get advertisers back in the paying ranks with an advertising exchange.

The advertising exchange, dubbed Facebook Exchange, is set to launch sometime in the next few weeks, and will give large companies an opportunity to deliver ads to Facebook users who have recently browsed those companies' websites.

A Facebook user who recently shopped for a computer on Dell's website, for example, could be shown a Dell ad when visiting Facebook. Some reports suggest coverage could expand from there, with users needing only to visit the site of an electronics retailer in general before seeing the advertising.

Facebook's approach resembles similar behavior launched by Google and Yahoo, in which advertisers can bid in real time for targeted advertizing. Oddly enough, the new Facebook exchange won't allow companies to buy mobile advertising, a development that's likely hurting Facebook as more and more of its users come in from mobile devices.

A Facebook spokesperson himself called the exchange a way that "advertisers can deliver more relevant advertising in a timely manner at a scale not possible before." Given the recent problems Facebook has had with keeping advertisers – and the continuing issues the company has faced in regard to its stock price since the IPO – it's clear Facebook has to do something to keep advertisers in the fold and paying, lest their major revenue streams dry up.

Facebook also has something of an unusual situation, in that more advertisers are discovering value in the social media marketing strategy. Getting likes and friends on Facebook has been shown to pay some substantial dividends, and considering the relative simplicity – not to mention cost savings – of such an act makes it especially attractive to companies trying to save as much money as possible.

Facebook facilitating ad buying – especially well-targeted ad buying – may serve to bring companies back into the paying fold, but there are many more moves the company can, and likely should, make to give themselves the best chance of selling paid ads for display to the masses of people using Facebook.

But any move in the right direction is a good move to make, and hopefully this will pay off for Facebook, enough to have them continue moving.




Edited by Braden Becker



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