Real Time Bidding in Facebook
http://www.bloomberg.com/news/2012-09-13/facebook-outperforming-google-in-ads-from-browsing-partners-say.html
Facebook had been experiencing an increase in ad revenue, that is, advertisers are seeing that advertising on Facebook now gives them “more bang for their buck.” Before, advertisers had been pulling away from Facebook because they just weren’t seeing the results that they wanted after investing money into this social networking site. But now, Facebook has been using Facebook exchange, a program that “tracks user activity across the web.” This is essential for Facebook who recently saw a 45% drop in stock and needs advertisers. Facebook was compared to Google in this article as an increasingly important competitor in real-time bidding, a potential competitor who may take away advertisers from Google.
This article relates to chapter 15 on search ads and matching markets. Experts have been saying that if more advertisers get wind of the success that Facebook Exchange has been showing, advertisers will be willing to pay more. This makes sense because real time bidding is based on two parts of our course: search ads and bidding. Google sells ads based on what the individual person (person using the search engine) wants from the evidence of what they searched in the past and they sell the ads through a bidding process once the advertisers know who the person is and if they (the advertisers) think that this person would be a potential client. Facebook has taken this idea but instead of a search engine, they decided to just sell ads based on what their users would want. Through Facebook Exchange, a person’s individual interests will be seen (after tracking their web activity). This information will be given to advertisers who will then bid their particular values to Facebook for certain slots. If an individual shows a lot of interest in a particular thing, or has shown that they are concerned with a certain object through their web history, an advertiser can raise their value for a good slot on Facebook to advertise to this particular person based on the likelihood of that individual clicking on their advertisement. Real time bidding appears to be potentially revolutionary in this idea to taking the individual’s interests into consideration so advertisers are predicted to be willing to pay more for good slots on Facebook, “advertisers compete to deliver ads once a user’s browsing history matches a marketer’s profile.” Through these increased values by the advertisers, Facebook can just do the same procedure of matching markets and supply slots to advertisers at increased values than before.