Facebook Exchange: Cookies For Users and Real-time Ad Bidding

Many people have taken interest in how Facebook will change its platform now that the company has gone public. People have been concerned with how Facebook will track user data for marketing efforts and the effects this will have on the Facebook platform. Facebook has already started rolling out some these changes such as Promoted Posts, but one of the most significant rollouts has just been announced. The Facebook Exchange will debut in within several weeks and is posed to change the way companies and Internet advertising agencies use Facebook as a marketing and data collection tool.

What is the Facebook Exchange?

The creation of Facebook Exchange will now support the real-time bidding on specific display advertisement slots that marketers and companies can purchase to deliver more time sensitive advertisements. The advertisements will be priced based on cost per thousand views and will be sold via third party distributors such as AppNexus, DataXu, MediaMath, AdRoll, and Turn. Real-time bidding like Facebook Exchange is not new, and is used by companies such as Google and Yahoo, expanding the realm of pay per click internet marketing into Facebook.

How does it target users?

The advertisements will be targeted based on cookies on the user’s computer and allowing advertisers to send specific ads relevant to the user’s browsing history. For example users who viewed travel sites but did not book can be sent travel advertisements. This is a significant move in advertising on Facebook, since ads were previously only targeted based on interests and demographics. The ad slots will only include Marketplace ads, which are the standard ads on the right side of a page featuring a headline, text, and small image. The new bidding process for these ads will allow advertisers to more effectively deliver time sensitive ads to specific people because they can buy specific time slots and send ads to specific users with the new platform.

The image below give you a visual depiction of how marketers can now target advertisements based on a cookie which collects information on your search and browsing history. Previously Facebook ads were focused on brand recognition and brand fulfillment, but now they will be able to target specific advertisements to foster conversions and fulfill demand.

This marketing platform and revenue stream is sure to make some users uneasy, and for them Facebook has taken measures to protect privacy. Although many sites currently track user browser history for advertisements via cookies, Facebook allowed users to protect their privacy by allowing them to use a third-party opt-out on the sites of demand-side platforms to stop receiving the cookies.

Advertisers have been looking for more ways to apply, collect, and utilize data from Facebook so Facebook Exchange could satisfy this desire. Many people believe this will change the means of social advertising to foster a stronger collaboration between social media marketing and pay per click efforts of social media and web advertising agencies.

While it is hard to predict the outcome, Facebook Exchange is surely a drastic change in the website’s advertising platform and will spark debate from opposing viewpoints. While extremely useful for Internet advertisers, users may not feel the same joy. Let us know what you think on this topic.

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