Facebook’s Revised Ad Strategy
Facebook is revising its advertising strategy. From what we learned in class, Facebook uses the VCG procedure to determine which ad slots to give to which buyers. As we know, the steps to the VCG principle are as follows:
1. Buyers announce item valuations that may or may not be truthful
2. Make a perfect matching maximizing the total valuation of each buyer for what they get based on the announced valuations
3. Charge buyers the VCG prices Facebook has now decided to eliminate ads that with low quality contents, including ads that withhold information, engagement bait ads, and ads with sensationalized language.
What this blog post investigates is how Facebook might approach such a filtering process. On their blog post addressing how Facebook plans to reduce low-quality ads, they say that they plan to, from the get-go, reduce distribution of low-quality ads in ad auctions. What this means is that when ads participate in an auction and get some slot, if there is a low-quality ad, it will not be distributed as widely as a high-quality ad. It appears that these bidders will still go through the VCG auction. However, if they post inappropriate ads, then their ads will be taken down by the company if they are identified as low-quality. These low-quality ads are identified by tactics such as machine learning, which have the ability to scan an ad and determine whether it looks like spam or a legitimate ad with original content. Unfortunately, Facebook’s new ad rules have had some unintended, negative side effects, such as non-political LGBTQ ads being taken down. Being a company as large as Facebook, it cannot be easy to keep track of every ad that is ever posted on the site. What can be done, however, is what they are currently doing, and that is investing in talent and technology that will help them track down these bad ads.
https://www.engadget.com/2018/10/17/facebook-political-ad-allows-anonymous-advertising/
https://www.facebook.com/business/news/reducing-low-quality-ads-on-facebook