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November 20, 2012

Facebook Ad Tool Could Dominate Market

Facebook has a new tool in its arsenal that could give Yahoo, one of the biggest online ad sellers, a run for its money.

Facebook is launching a tool which enables online retailers to track purchases by members of the social media site who have viewed their ads.

The feature is one of the new advertising options Facebook is marketing to marketers as an advertising option that pays dividends.

The tool expressly targets direct response marketers, such as online retailers and travel websites whose advertisements are meant to bring in immediate sales, according to news reports.

Facebook will also give the advertisers the option of directing their ads at certain groups on the site that share similar tastes with consumers who traditionally respond well to a particular ad.

According to Reuters, online retailer, which has tested Facebook’s new service, lowered its cost “per new customer acquisition by 39 percent when it served ads to consumers deemed most likely to convert,” Facebook said.

According to Facebook, a conversion is “anything from a completed sale, to a consumer taking another desired action on a website, such as registering for a newsletter.”

A Yahoo source who contacted said the new tool not only “competes with one of Yahoo’s flagship ad products” it “would kill us.”

The source said the new tool “closes the loop” on brand advertising in a way no site but Facebook can.

According to the article, the reasons Facebook can offer such a service and other sites, including Yahoo, can’t are:

• No one has more brand advertisers already on board than Facebook.

• No one has as many users looking at brand ads as Facebook does.

• No one has all of the e-mail addresses of the users looking at its Facebook ads the way Facebook does.

The source told Yahoo offers a similar product to advertisers, bringing in a profit of about $500 million. The source said Facebook could at least double that figure.