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posted: 6/16/2012 7:35 AM

Facebook to debut real-time bidding for ads

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Bloomberg News

SAN FRANCISCO -- Facebook plans to introduce real-time bidding for advertising on its site, a technology used by Google and other Web companies to more effectively target ads to consumers.

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The service, Facebook Exchange, will let advertisers reach specific types of users on the social network based on their browsing history, Annie Ta, a company spokeswoman, said Wednesday. Prices will be based on the cost per thousand viewers and sold through third-party technology partners. It will debut in "the coming weeks," she said.

Facebook, operator of the world's largest social network, has tumbled 28 percent since its stock market debut last month, a decline caused in part by concern that ad revenue growth isn't keeping pace with surging membership. The company, with more than 900 million users worldwide, brought in $3.15 billion from advertising last year and has introduced mobile ads and other new services in an effort to boost sales.

With Facebook Exchange, marketers will be able to target people who have perused certain kinds of websites in the past based on cookies, or small pieces of code, that can track activities on the Web. For example, users who have visited travel sites to research trips to Hawaii may later see a promotion on Facebook about hotels in Hawaii.

Facebook's shares rose in extended trading, after earlier falling less than 1 percent to $27.27 at the close in New York. The stock began trading at $38 on May 18.

The company's technology partners for selling ads based on user browsing patterns include TellApart, Turn, Triggit, DataXu, MediaMath, AppNexus, The Trade Desk and AdRoll.com, Ta said.

Facebook has started placing cookies on the Internet browsers of its users, which will be used by its partners to identify members of the social network, Ta said. While there isn't a way to opt out of this tracking on Facebook's site, the outside vendors will give users an opportunity to block cookies.

The new bidding process is designed to help advertisers deliver more time-sensitive messages. For example, if a sports- apparel company wanted to reach fans on Facebook in the moments after the last game of the NBA Finals, they could prepare ads that highlight the Miami Heat and the Oklahoma City Thunder and choose which one to run depending on the outcome of the game.

Advertisers now target users on Facebook based on the interests they list in their profiles and the pages they "like" on the site. The company will continue to offer these ads, and such interests won't be used as part of the real-time bidding exchange, Ta said.

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