Facebook’s Online Advertising System

In the previous chapter, we’ve mentioned that Microsoft’s investment seems like it’s been done just to ensure the brokering of Microsoft ads and search engines on the site. Over the past few months, Microsoft has lost numerous deals with various companies to Google. These include but are not limited to: Time Warner, DoubleClick, and Time Warner’s AOL unit.

The Online Advertising Market

In the field of online advertising and search engines, Microsoft is facing challenges thanks to its primary competitor – Google. They can’t seem to keep up with the pace of the online advertising market that’s currently dominated by Google. But Microsoft focused lately on designing a powerful technology to systematize their advertising market.

International Versions of Facebook

It’s been rumored that Google was negotiating to win an agreement with Facebook. Either way, the end result is clear and that is Microsoft investing $246 million, thereby ensuring their ad-brokering partnership with Facebook up to 2011. Keep in mind that this includes international versions of Facebook. As we’ve seen, Facebook has developed an advertising system of its own, and its likely effect on Microsoft’s ads is unknown.


Anyway, it is somewhat hard to believe that the Google giant could lose a deal to Microsoft unless they didn’t want the agreement badly enough. Based on their latest acquisitions, deals and agreements, profits, and growth, I think we all can agree that Google wasn’t longing to fund Facebook. I won’t reject the rumor; they may have indeed been there to negotiate, then ultimately abandoned the deal. Assuming they did, it probably would not have been because of finances; either it wasn’t worth that much for them, or Facebook simply rejected their offer.

Demographic Data to Optimize

Right now there are the following advertising possibilities to market a specific product, brand, or service on Facebook: mass banner ads, flyers targeting members of a particular university or community (a self-service solution), ads that feature groups and promotions, custom polls to get detailed results based on age, location, sex, school (market research), and integrated solutions (embedding into news feeds).

Members have the ability to quickly buy and set up social ads either on a CPM (cost per thousand) or CPC (cost per click) basis. You can precisely target your specific audience, customize your ad(s), and ultimately keep an eye on the evolution of demographic data to optimize your ad(s), getting the most out of them.

You can also create Facebook Pages that engage fans and potential customers. Using this service you can create a deeper connection with your clients because you are in direct contact. You can send them the news, special offers, or any kind of update. They can leave you feedback. The more member interaction you can get the more clients you’ll get; it’s a vicious cycle because their actions are broadcast via news feeds.

Combine all of these together and you have a really powerful marketing system to promote your brand, product, or service. Also, I am curious to see how their new ad brokering system works out. Many thought that it should be something that picks up specific data from user profiles and targets dedicated ads on preferred hobbies, music, etc. Integration into the Facebook platform is promising due to the high number of daily visitors. But their current approach, where users become somewhat unwitting spokespersons for the brands and companies they “friend,” may be considered too invasive.

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