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Facebook’s (NASDAQ:FB) recently-launched advertising system, Facebook Exchange, will utilize users’ web browsing history to target advertisements at them. The system, announced to marketers last week and set to be rolled out in the next couple of weeks, gets advertisers to bid to get their ads in front of users.
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Since it went public last month, Facebook has been under pressure to develop a sustainable advertising model. At the moment, ads are targeted based on members’ profiles and the brands or pages they voluntarily “like.” Facebook said in a statement that users will be able to opt out of the new system and that the social network will not share any user data with the advertisers.
“By bidding on a specific impression rather than a larger group, advertisers are able to show people more relevant ads while also running more efficient and effective campaigns,” Facebook said in a written statement.
Mike Stiles of social marketing company Vitrue compared the feature to Google’s (NASDAQ:GOOG) successful Ad Words. According to IDC, more than $5 billion in online advertising is expected to go to real-time bidding ads by 2015. However, such actions don’t come without pitfalls. Facebook was forced to settle a lawsuit filed against it by a user group that alleged its Sponsored Stories feature broke California law by using their activity on the social network to create ads without paying them.
According to estimates from research firm eMarketer, Facebook is on track to grow its ad revenues 60 percent this year to top $5 billion.
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