Facebook will no longer be serving banner ads from
Microsoft, but this isn't a sign that relations between the companies have
grown cold.
Rather, social ads are growing up and it is time for Facebook to
leverage them better, the social network and analysts who follow it believe.
Microsoft Bing General Manager Jon Tinter wrote in a blog post Feb. 5. that Facebook
would begin selling its own display, or banner ads, instead of those provided by Microsoft.
These graphical display ads
have been at the heart of the ad deal Microsoft first struck with Facebook in
2006, when the social network began featuring banner ads from Microsoft's
AdCenter platform, and fortified in 2007.
When Tinter announced the change it was natural to ask
whether Facebook had gotten frosty toward Microsoft, whose own social services
and advertising plans are evolving.
A Facebook spokesperson said social ads perform better because they
are targeted to people based
on the information they provide, thereby providing a better user
experience because they are more consistent with the look and feel of
Facebook.
"This combination
of targeting and social relevance is the primary driver behind the shift in
strategy. Microsoft has been a great partner and we continue to work with them
in other areas, including search."
Indeed, the companies also broadened their search pact to
let Bing power Facebook's Web search in the U.S. and abroad.
Altimeter Group analyst Charlene Li said she was not
surprised Microsoft and Facebook made this play, adding that Facebook and
Microsoft remain tight and that Microsoft's display ads, "which really
look awful inside of Facebook," aren't needed. She noted that Facebook can
better serve social ads better than Microsoft.
"Microsoft simply doesn't have access to it, nor are
the advertisers in the Microsoft network set up to handle social at this point,"
Li said. "This is an evolution, and something that both parties knew would
happen soon."
Li further wondered if and when Microsoft and Facebook
will partner to let Facebook offer social ads, via the Facebook Connect
application to extend the social network to third-parties, to partner publishers
that want to serve social ads on their sites.
"If they are using Facebook Connect for single
sign-on and social commenting, they may be interested in social ads as well,"
Li said. "Microsoft would benefit by offering social ad options right
within AdCenter, charging a pass-through fee to Facebook as it does other
publishers."
Meanwhile, Microsoft will continue selling search ads on
Facebook to bolster Bing, the software maker's new search engine aimed at challenging
Google in the lopsided market for helping users find information on the Web.
Google commands 65 percent of market share in the United States, and almost 70 percent worldwide.
Bing's market share sits at around 11 percent, according to comScore.
Facebook, which turned six years old Feb. 4, is in the
midst of a
redesign geared to improve the experience for its 400 million users.
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