Facebook Says Fast Moves with Microsoft a Good Thing

They say college kids move fast these days. For college market site Facebook, hopping in bed with Microsoft after initiating talks this past Thursday felt just right. According to a deal announced today, Microsoft will act as the exclusive seller and manager of all Facebook’s display ads through its adCenter platform, and will provide the social networking site’s first sponsored text link ads.

The speed with which the deal fell into place is a good thing, stressed Facebook Director of Marketing Melanie Deitch. “Why drag this out?” she questioned, asserting that the two companies share common goals. “We’re both technology-focused companies at the core,” she noted. Other ad platform offerings, Deitch explained, “just don’t fit the bill.”

Starting this fall, Microsoft-served banners will run on the left-hand side of the site below the navigation bar. The companies have yet to determine where the sponsored links will run, said Deitch. Until now, Facebook has sold targeted banners, “flier” units for local advertisers and sponsorships. Facebook will continue its focus on the more integrated sponsorship offerings, according to Deitch; advertisers such as Apple and the Dave Matthews Band 2006 tour sponsor their own groups which can be joined by Facebook members.

To date, the site has been managing its own display ads. “We really wanted to work with a trusted partner… so that we can focus on our core business,” explained Deitch.

The deal has been compared to one signed between Google and News Corp.’s Fox Interactive Media (FIM) earlier this month which made the search giant the exclusive provider of search results and associated paid listings on a number of FIM’s Web properties, including the highest-trafficked social networking site, MySpace. Not only does that $900 million agreement not involve display ads as the Facebook/Microsoft deal does; it entails sites outside the social networking sphere.

According to site traffic measurement outfit Hitwise, MySpace grabbed nearly 80 percent of the traffic to social networking sites in June, while second-place Facebook trailed at about 7.6 percent. To be fair, the Facebook universe is far more exclusive than that of MySpace, which allows anyone and everyone (including TV and movie characters) to set up free profiles. Facebook limits profiles to high school and college students and faculty, as well as staffers from a handful of large companies including Apple, Accenture, Gap, Microsoft and Pepsi.

Facebook surpassed nine million users this week, according to Deitch, who added that display ad targeting through Microsoft will most likely remain similar to what’s already available on the student-schmoozing site. Ads can be targeted based on geography, gender, member interests, and networks (i.e. Web domains attached to specific schools or businesses).

In June, Facebook and agency holding company Interpublic Group forged an agreement to facilitate advertiser sponsorships and conduct consumer research for Interpublic clients. Deitch said she wasn’t sure whether the new Microsoft deal would have any effect on the Interpublic relationship.

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