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Facebook Battles Investor Fears With Real-Time Exchange

  |  June 14, 2012   |  Comments

UPDATE: Advertisers will be able to target users based on customer data and data from select DSPs.

Update: A Facebook spokesperson responded to questions posed in the original article. The Facebook exchange is currently only available in the U.S. market. In addition, mobile inventory will not be made available to the DSP partners. "Since RTB is currently only standard marketplace ads, this means they can't appear on mobile at this time because they can't appear in News Feed," noted the spokesperson.

Original Story: Facebook is set to launch a real-time ad exchange, opening its site up to a large pool of data for display ad targeting. Advertisers will be able to target users based on data from select DSPs. However, they can't combine native Facebook data with that outside data, which would be sure to ruffle feathers among privacy advocates.

The new exchange was first reported yesterday by Bloomberg and is planned to launch "within weeks" according to the story. Facebook has been dropping cookies on user machines that enable data partners to identify them when serving ads, Bloomberg stated.

Think of Facebook as any other publisher providing real-time bidding inventory to advertisers buying through exchanges. Advertisers will target people through the DSP partners, and if Facebook finds a cookie match, an ad will be served.

There's little doubt advertisers will be excited about the offering, which will allow them to employ their own customer data and third-party data to serve up ads on Facebook.

"With the Facebook Exchange, now [advertisers] can expand reach to harness the quality and scale of Facebook - and have access to over 25 percent of U.S. display impressions - while continuing to target using [the] audience data [they've] collected to build a relevant, efficient and complete marketing program," said Paul Knegten, VP of marketing at MediaMath, one of the DSPs Facebook is partnering with on the exchange.

ComScore reported in January that Facebook's share of the U.S. display ad market hit nearly 28 percent in 2011.

Facebook will not share any personally-identifiable information with the DSPs or advertisers. When an impression is available, Facebook will identify the user and the DSP will bid in real time for the impression.

"We do not share any user data with advertisers and people still have the same control over the ads they see on Facebook that they do today," said a Facebook spokesperson. Users will be able to opt out of the targeting through the third-party partner sites or Facebook's AboutAds page. "We are not building profiles based on the Facebook Exchange," continued the spokesperson in an email statement.

According to the Bloomberg report, AdRoll, AppNexus, DataXu, TellApart, Trade Desk, Triggit, and Turn will also be part of the exchange.

It is not clear whether the offering will be available in the U.S. market only or elsewhere also.

While news of the platform - first reported in a financial publication - is most likely intended to convince investors that Facebook can indeed create more revenue growth from its current user base, it falls short of the ultimate Facebook ad network anticipated by industry observers. Many expect Facebook to eventually launch a giant ad network based on the share buttons it has strewn across the web. Because the company is constantly battling privacy concerns, it's not surprising it is rolling out its ad products gradually.

As Facebook introduces new ways to monetize, the technology and services sector that has risen along with the social site is shaking out. Today, social management platform Syncapse purchased social and search management firm Clickable. The deal follows the acquisition of social marketing platform Buddy Media by Salesforce.com and Oracle's purchase of Vitrue.

Facebook has also been subject to scrutiny for its slow move into monetizing its mobile traffic. The firm recently said it would sell mobile ads separately allowing advertisers to target mobile newsfeeds and desktop newsfeeds separately or in a combined buy.

Whether Facebook will make its mobile inventory available to its new DSP partners is not known.

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Kate Kaye

Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.

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