Facebook is planning to debut a service, Facebook Exchange, that will allow the company to more effectively target ads to customers, Bloomberg reported today.
The service, which is expected to deploy in the coming weeks, provides real-time bidding on ads, which means advertisers can reach users based on their browsing history, Facebook spokeswoman Annie Ta told Bloomberg. This is similar to what other Web companies, like Google, use to target their ads, and could give a substantial boost to Facebook's ability to increase its display ad revenue and sell-through rates on its inventory.
Facebook confirmed to CNET that the company is testing this new option for advertisers. Prices will be based on cost per thousand views, and the ads will be sold through third-party partners.
The social network already targets its ads based on what users do on its site, but real-time ads allow advertisers to target people by tracking their activities on other Web sites via cookies -- temporary stores of information, typically used to retain information from session to session. The cookies let vendors know which sites users visit, and then display ads with similar subject matter on a user's page, according to Facebook spokesperson.
This means that if you visit a travel site and search for a flight but don't make a purchase, an advertiser can bid on an ad showcasing the trip you were just looking at. That ad will then show up on your page.
The social network has already started placing cookies on browsers and there is no way to opt-out. If you don't want to have these hyper-targeted ads pop up on your pages, you can disable your cookies on the third party sites or on your browser.
Facebook is testing Exchange with eight advertising demand-side platforms, according to a TechCrunch report. The system is expected to be expanded in the next few weeks for sidebar ads charged at cost-per-thousand-impressions.
As TechCrunch's Josh Constine explained," Ford could drop a cookie on a user who looks at the new Escape SUV on its website, but doesn't request a local quote. Then Ford could bid to show that user ads stating 'Ford Escape: Just $21,000'. These would be much more relevant than generic Ford ads showing sedans or trucks that the user might not be interested in. And Ford would likely be willing to pay a high price to reach that qualified lead."
CNET has a message into Facebook and will update when we get more information.
Updated, 10:43 p.m. PT on June 14: Added confirmation from Facebook.