Facebook is launching a new targeted, real time ad bidding service called Facebook Exchange that could radically alter the way businesses advertise on the world’s biggest social network.

Facebook Exchange allows advertisers to target their efforts based on Facebook’s vast collection of user data gathered by cookies. That means everything from browser history to social shares are fair game.

How Facebook Exchange Works

Here’s a typical Exchange transaction might work. Let’s say you visited an online shoe retailer like Zappos, selected some shoes, but wound up abandoning the cart. Zappos can use Exchange to identify visitors like you and target very specific ads to appear on your Facebook page.

Exchange users will be able to combine the browser history information with Facebook specific information like what pages you’ve liked, to drill pretty deep into your demographic interests. So if you’ve liked America’s Top Model and you recently abandonded a Zappos cart, you might start seeing ads that combine those bits of information.

What About Privacy?

Not surprisingly, this new feature has privacy advocates up in arms. Facebook has long been accused of misusing user information and this type of data mining is the source of those complaints.

Facebook officials have said that they won’t be seller user information, but they have made “share my information with Facebook Exchange” an opt-out, rather than opt-in, privacy setting.

Why Now?

In the wake of their recent initial public offering (IPO), Facebook is desperate to find new revenue sources and this one is a no-brainer. After all, it leverages one of their biggest assets, a treasure trove of self-supplied consumer information, and challenges Google’s chokehold on Internet advertising.

Facebook users should expect to see a lot more projects like this coming out of Facebook in the months and years ahead as the company begins answering to shareholders.

What do you think of Facebook Exchange? Is it an invasion of privacy? Or is it just the next step in a natural progression? Share your thoughts on our Online Gambling Newswire.


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