Will This New Ad Strategy Save Facebook?

Facebook (NASDAQ:FB) has been a rocky ride for investors. Losing nearly 42 percent of its share value since its IPO, the company is under a lot of pressure to monetize its 950 million user base or be swallowed by its costs. Facebook’s latest effort is to tailor advertising products to specific industries in order to increase effective sales rates.

Facebook makes makes most of its money — about 85 percent — from advertisements. After beating out Yahoo! (NASDAQ:YHOO) and briefly shooting to the top in revenue for display advertising, Facebook will fall to the number two slot, while Google (NASDAQ:GOOG) is slated to be the king of the space in 2012.

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“The most important thing to do is understand what a marketer wants to achieve and tailor a product to that,” said Carolyn Everson, Facebook VP of global marketing solutions, to reporters at Advertising Week 2012. “What an automotive company needs in terms of national brand awareness to launch a car versus how they have to drive people to a dealer, and who the secondary players are in between, those are very different product solutions.”

It has been reiterated that mobile is the future for the company. COO Sheryl Sandberg said in an interview with Bloomberg that “the important thing for us is that we want to be on every mobile device, on every operating system, carried in everyone’s pocket in the world.

Combined with its new Ad Exchange program, Facebook could become a powerful tool for advertisers. FBX is similar to Google Exchange, and allows third-party partners to buy advertising space and target audiences using their own data. This could mean getting advertisements as targeted as coffee in the morning and pizza at lunch, and thanks to a recent liaison with Datalogix, advertisers could even know which shops you frequent. Through a strategy called retargeting, retail websites users visit can track that person back to Facebook and advertise to them there, as well. This new advertising platform has raise some privacy concerns, but Sandberg dismisses this, saying that “trust is the cornerstone of our business.”

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