How Facebook’s Ad System Works
Unlike other websites where advertisements are placed somewhat randomly and out of the way throughout the page, Facebook’s ads are woven into each user’s News Feed instead. With this implementation, the advertisements appear less intrusive and less like an actual advertisement and more like organic content to users. As a fairly controversial topic, Facebook’s advertisements are known to target specific types of people. Using collected data from a user, like what content does he/she like, their geographical location, their tendencies, Facebook matches all of these characteristics with specified ads that are more likely to ‘fit’ the user.
As we have learned in class, advertisement sellers use different methods of auctions to sell advertisements. While Google uses a variation of the second price auction, Facebook’s auction algorithm is different. For Facebook, advertisers will each place bid prices to place an ad in a specific location/situation. Facebook runs a digital auction using these bid prices to determine a winner. However, unlike a normal digital auction where only the bid prices are considered, Facebook does not solely use prices to choose a winner. Wanting to make their advertisements seem less intrusive, Facebook adds weights to the bid prices based on how relevant the ad is to the specific situation. If an advertisement is more relevant to a targeted user, the advertiser does not need to bid as much to win the auction. Thus, even if an advertiser bids more for a ad slot, if the ad doesn’t fit the user as well, it might not win.
This brings up the question of how separated is content from advertisement really on Facebook. Although Facebook marks these advertisements as ‘Sponsored’ or ‘Promoted,’ it still is often unclear whether a post is organic or an ad. Also, if a user likes one of these advertisements, they will continue to appear in the user’s News Feed without the ‘Sponsored’ or ‘Promoted’ tags. Many individuals find this type of advertisement sleazy as the targeted advertisements and lack of ad label can influence users who are unaware, much like the recent case of Russian advertisements.
This article demonstrates a different way auctions are used in real world applications. Although we have learned about first, second, descending, and ascending auctions and different algorithms like GSP, Facebook’s advertisement auctions are a little different with the inclusion of weights based on ad relevance.
https://www.nytimes.com/2017/10/12/technology/how-facebook-ads-work.html