Facebook is taking its advertising strategy to a new level, as the company will use information from users’ profiles to target customers all across the web. Facebook has been trying to boost its advertising business for a long time, with no success. According to a Webtrends report, Facebook only achieves a 0.051% click through rate on its displayed ads, a poor performance if we compare it to the 0.4% rate maintained by Google, which holds one third of the digital advertising market. In addition, despite the wide customer base of Mark Zuckerberg’s network, an open question is their ability to maintain it in the long term. Facebook still has a long way to go in terms of customer reach, as they only 51% of all internet users vs. 90% of Google.
With its new strategy, Facebook
has decided to move from keeping their ad business locked in the social network
pages to give a better use of all the user data idling in their pockets,
offering it to potential advertiser to specifically target customers based on
their identity and the information they provided in their account and activity.
David Jakubowski , Facebook’s head of advertising technology declared in an
interview that “We are bringing all of
the people-based marketing functions that marketers are used to doing on
Facebook and allowing them to do that across the web”.
The display advertising has been
traditionally performed through the use of cookies on each individual browser,
which presents several limitations and seems outdated with current online
marketing ambitions. The new service that will be offered by Facebook will
allow companies to perform a detailed targeting in their advertising linking
each user with their real identity and the information they provided
voluntarily. Not only eliminates the browser barrier, but it is also tracks
each customer across devices, offering a more complete picture of its behavior
and preferences. It also will allow advertiser to have access to new
information pools like knowing how often each customer sees their ads or their
purchasing patterns.
The move is expected to be particularly
effective in the mobile advertise market, as cookies don’t work on mobile
devices. “The move is a direct assault on
the cookie and an attempt by Facebook to position itself as a key currency in
the display-ad universe. Facebook has the largest logged-in user base in the
U.S. with 1.3 billion users, it's also one of the largest in the world. Those
users tend to stay logged in on PCs and mobile devices, allowing Facebook to
track specific individuals in ways cookie-based systems can’t.”
The new service, referred as “people-based
marketing”, will be offered service through Liverail, de video ad server, and
Atlas, the ad server, bought by Facebook in August and 2013 respectively. The
company is said to be already in talks with the advertising holding monster
Omnicom to support the initiative, and make use of the new service on its
launch.
However, the privacy issue still
remains on the table. Facebook claims that the user’s identity will remain
anonymous to advertisers and publisher, but how is the new strategy going to
affect customers? Along the same lines, in order for the system to work, users
need to stayed logged in the application. May that force a change in the
customer’s behavior? These concerns are popularizing new social networks that
don’t make use of advertising and have more restrictive privacy standards, like
the start-up Ello.
The effectiveness of the new
strategy still remains to be proved, but the market seems to have welcomed the
new plan with a 2% share price increase after the news unveiled
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