Not unexpectedly, Facebook is about to launch its own form of targeted PPC advertising.

Known as Facebook Exchange, this new product is still undergoing tests at the present time – but is expected to become available within the next few weeks.

Exchange will operate on a bidding-based system that will serve ads related to users’ real-time web activity, via specific DSPs (Demand-Side Platforms).

DSPs work in a similar way to Google AdWords, but instead of choosing keywords, advertisers choose the characteristics of their target audience.

Advertisers will only be able to take advantage of Facebook Exchange with sidebar advertising (not Mobile Ads or Sponsored Stories), which will be bid for based on a cost per thousand impressions.

There are currently two very clear opinions of Facebook’s decision to launch this product: businesses see it as an excellent opportunity to supplement their existing presence on Facebook, while some users believe it is just an invasion of privacy and not appropriate for a site they only use socially.

Because the ad targeting makes use of cookies that users have collected on their PCs while browsing, users of Facebook will have an opt-out option, but through the DSPs rather than Facebook itself.

Facebook has also stated that the Exchange ad programme will not be combined with its own advertising, or used to access users’ personal data.

From a purely business point of view, Internet marketers who rely heavily on digital advertising will relish this opportunity to maximise the impact of their ads by making them personal, relevant and served to the target audience in real time and for brands that users have already shown an interest in.

Existing Facebook sidebar advertising is heavily based on assumption: for instance, it assumes that all users who show themselves as single on their relationship status are looking for a partner and thus bombards them with advertisements for dating sites.

DSPs also currently seem to assume that anyone who is over 50 has a weight problem, judging by comments made by mature friends about the amount of diet and exercise ads that come up next to their profiles!

Facebook Exchange does appear to have some appeal for Internet marketing, as it will be showing specific ads for items or brands that the user has recently been viewing.

Theoretically, this means that the ad will seem much more familiar and far less intrusive to the user, who is therefore more likely to show further interest.

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About the author:

Alistair Harris is ClickThrough’s head of content. A double-award-winning senior journalist, Ali holds both the NCTJ and NCE qualifications and has more than ten years of experience in traditional press and PR. He has worked in digital marketing and SEO for the past three years and is passionate, enthusiastic and committed to quality.