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    June 14, 2012 // 12:19 PM

    Facebook Tests Real-Time Ad Targeting Based on Web Browsing Activity

    Written by Pamela Vaughan | @

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    As a user, the ads you get served on Facebook are about to get a whole lot eerier (a kinder word for creepy). But as a marketer, these new Facebook ad targeting options coming soon will also enable you to achieve a whole new level of Facebook ad relevancy. Intrigued?

    Yesterday, TechCrunch alerted us to a new ad targeting option Facebook is testing. Facebook Exchange, as they're calling it, is a bidding-based ad system that serves up ads related to a user's web browsing activity, in real time. Facebook is currently testing the new service with 8 advertising demand-side platforms (DSPs), reporting that it will be more widely available in the next few weeks. The Facebook ads marketers will be able to use Facebook Exchange with are the traditional Facebook sidebar ads charged at cost-per-thousand-impressions -- not Sponsored Stories or mobile ads.

    How Facebook Exchange Works

    Let's get a little bit more detailed about how this new ad system will work, using the example of a hypothetical online shoe vendor (let's call it Shoezie) to better demonstrate how this would work.

    • Facebook user Sally browses the Shoezie website, looking for the perfect high heel for her friend's upcoming wedding. Unbeknownst to Sally, Shoezie has hired one of the DSPs that works with Facebook Exchange.
    • A cookie gets dropped on Sally's computer. (According to TechCrunch, this typically happens when Sally has shown "purchase intent.")
    • Sally may see a few heels she likes, but she decides to hold off on purchasing, leaving the site. 
    • Meanwhile, Shoezie has already pre-loaded ad creative in order to target users like Sally.
    • The DSP hooks up with Facebook to notify them of Sally's anonymous user ID so Shoezie can target her with Facebook ads.
    • Sally visits Facebook, which recognizes the cookie on her computer, and the DSP gets notified that Sally is on Facebook.
    • The DSP has the opportunity to make a real-time bid to display Shoezie's ads to Sally.
    • DSPs that make the highest bids get their very targeted ads displayed to Sally.

    What About User Privacy?

    We thought you might be wondering about that, as privacy has definitely had its share of concern among internet users these days. Cookie-powered advertising on the internet is nothing new, but here's where it gets a littly sketchy on Facebook's part ...

    TechCrunch informs us that Facebook users will have the option of opting out of Facebook Exchange via the specific third-party DSPs. In other words, if Sally is creeped out that she is being shown ads for high heels from Shoezie and decides to 'x' out of the ad, she will then get shown a link to the specific DSP that Shoezie used to serve the ad to her, where she can opt out of future Facebook Exchange ads from powered by that DSP. That being said, according to Facebook, Sally and other users won't be able to opt out of the Facebook Exchange program completely from within Facebook. This is partly because Facebook can't control whether DSPs drop cookies on Facebook users, but as TechCrunch points out, that doesn't mean it can't decide not to use those cookies.

    If Facebook wants to nip the privacy concerns in the bud, it really needs to find a way to combine these new retargeting ad options with its own Facebook ad targeting data. Failing to do so could open up the social network to some criticism, especially in an internet age where privacy is a very sensitive issue. And honestly, who better to understand this sensitivity than Facebook itself?!

    The Perks for Facebook Marketers

    Privacy issues aside, Facebook Exchange does open up some exciting opportunities for Facebook marketers using ads to supplement their organic Facebook presence. One of the main appeals is that marketers will be able to show users much more relevant and personalized advertising. In addition, marketers will be able to take advantage of more real-time advertising. So if marketers are running specific, time-sensitive campaigns and promotions, they'll able to better use their Facebook advertising dollars to direct users to those specific campaigns.

    Where Facebook advertising was traditionally more interruption-based than PPC advertising in say, a search engine (in which ads get shown based on keywords the searcher is already interested in), Facebook Exchange does seem like it will offer a better ad option for inbound marketers since it attempts to be based on users' purchase intent and brands they've already expressed interest in.

    On the other hand, it'll be interesting to see how targeted marketers can actually make their ads based on the content users view on their websites. For example, consider another visitor to the Shoezie website (let's call her Nancy). Nancy is a journalist who covers the fashion beat, and she's doing a story about what's trendy in shoes these days. So she visits the Shoezie website to watch a video about how the Shoezie buyers select shoes to sell on their website. If this is the case, showing Nancy an ad featuring a 10% off coupon for shoes at Shoezie wouldn't exactly be the best ad targeting choice, considering Nancy has no intention of purchasing shoes.

    "It's kind of like the problem that Google has when you search for the word 'bass,'" says HubSpot's own head of paid marketing, Dan Slagen. "You could be looking for fish, guitars, or shoes. So in this case, you could go to Ford.com because you want to buy a car, or maybe you just wanted to watch a cool video. So how does the DSP know what you really want?"

    What do you think of Facebook Exchange? Will you experiment with its retargeting options once it's available to you?

    Image Credit: DonkeyHotey

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    Topics: PPC Social Media

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