Facebook Makes Ads Cheaper But More Efficient?
Yep thats right, Facebook’s advertisements are not sold directly by the highest bidder, but rather through an algorithm that ranks the bids by a combination of not only value, but relevancy to the user and surrounding ads as well. By doing this Facebook’s ads should receive more traffic, as people will be viewing ads relevant to them and their interests. This strategy also limits a companies ability to game auctions, as smaller companies can now receive ads even if they cannot afford to match the value of larger companies. But by doing so, they statistically increase the click rate of ads, as they will appear to more pertinent to users. This algorithm is slightly different to that of google’s as they take consideration of the targeted audience to make the advertisements more efficient.
The difference between this and the type of search we learned in class, is that this algorithm will not give the advertisement spot to whoever will pay the most, but rather to those who will contribute to the page the most. This difference will make it so long term the advertisements are more effective than those bought at the highest bid because people are more likely to click them; but Facebook will not earn as much as a profit as possible. Some may question whether or not this is a smart move for Facebook, as google has been doing it the opposite way for years now. My personal stance is that this is a shift for the better, as advertisements are more specific and meaningful, and will give companies a better chance to succeed and circulate the economy.