Facebook buys Microsoft ad technology platform
SAN FRANCISCO |
(Reuters) - Facebook Inc said on Thursday it had agreed to buy advertising technology from Microsoft Corp that measures the effectiveness of ads on its website, which should help in its fight with Google Inc for online advertising revenue.Under the long-rumored transaction, Facebook will purchase the Atlas Advertiser Suite, an ad management and measurement platform that Microsoft took on with its $6.3 billion acquisition of digital ad agency aQuantive in 2007. Facebook did not say how much it paid for the technology.
Unable to make it work for its own purposes, Microsoft wrote off $6.2 billion of the aQuantive deal's value last year.
Facebook has long been dogged by doubts about the effectiveness of its ads and was embarrassed just days before its initial public offering in May when General Motors Co declared it was pulling the plug on all paid advertising on Facebook's network.
Since then, Facebook has introduced a number of tools and partnerships to prove to marketers that advertising on its social network delivers enough bang for the buck.
Brian Boland, Facebook's director of monetization product marketing, said the purchase of Atlas was not a step toward creating a much wider ad network beyond the Facebook site, but analysts believe that is Facebook's ultimate goal.
"Although the statement announcing the deal focused on Atlas' measurement tools rather than its ad targeting technology, we expect that Atlas will soon be using Facebook's data to target sponsorships, in-stream ads, and other rich ad formats across the entire web, and that's big news," said Forrester analyst Nate Elliott.
"The question now is how quickly and successfully Facebook can integrate its data with Atlas' tools, and whether they can avoid a privacy backlash as they do so. History suggests they'll struggle on both counts," he said.
Google leads the $15 billion U.S. market for online display ads with 15.4 percent share, according to researcher eMarketer, followed by Facebook with 14.4 percent.
(Reporting By Alexei Oreskovic and Bill Rigby; Editing by Leslie Gevirtz and Tim Dobbyn)
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Facebook CFO calls Instagram a 'formidable competitor'
David Ebersman's statements about Instagram paint the photo app as both friend and foe.
Even as Facebook's property, Instagram, now with more than 100 million active users, could still pose a threat to the social network's business.
"One of the services that is, I think, a quite formidable competitor is
Instagram," David Ebersman, Facebook chief financial officer, told a
crowd of investors today at the Morgan Stanley Technology, Media, &
Telecom Conference.
The striking statement, made in direct response to a question about whether competitors are siphoning attention away from the social network, speaks volumes about Instagram's status as a powerful photo social network all its own.
The comment, particularly when coupled with previous disclosures, also suggests that the photo app is stealing away member attention from Facebook with no payoff. Facebook may own Instagram, but it's not profiting when members choose to use the ad-free app in favor of its ad-laden Web site or mobile applications.
In early February, Facebook confessed that some people -- teens in particular -- are indeed shifting their attention away from its own apps to competitors' services.
"We believe that some of our users, particularly our younger users, are aware of and actively engaging with other products and services similar to, or as a substitute for, Facebook," the company admitted in its 10-K annual report. "For example, we believe that some of our users have reduced their engagement with Facebook in favor of increased engagement with other products and services such as Instagram."
Now, we have two pieces of evidence that depict Instagram as a cannibal. Instagram is, quite literally, eating Facebook's young. And Ebersman, when asked specifically about how Instagram users are migrating over to Facebook, also admitted that the social network doesn't yet know how the applications relate to each other.
The problem is an important one for the company to solve -- and
quickly. Facebook is maxing out its ability to show growth in the new
user department, which means Wall Street will need to see an increase in
time spent with the site to measure its health. For its part,
Facebook believes that its ability to algorithmically sort the News
Feed and pluck out content people will find most interesting is core to
keeping its members engaged, Ebersman said.
The striking statement, made in direct response to a question about whether competitors are siphoning attention away from the social network, speaks volumes about Instagram's status as a powerful photo social network all its own.
The comment, particularly when coupled with previous disclosures, also suggests that the photo app is stealing away member attention from Facebook with no payoff. Facebook may own Instagram, but it's not profiting when members choose to use the ad-free app in favor of its ad-laden Web site or mobile applications.
In early February, Facebook confessed that some people -- teens in particular -- are indeed shifting their attention away from its own apps to competitors' services.
"We believe that some of our users, particularly our younger users, are aware of and actively engaging with other products and services similar to, or as a substitute for, Facebook," the company admitted in its 10-K annual report. "For example, we believe that some of our users have reduced their engagement with Facebook in favor of increased engagement with other products and services such as Instagram."
Now, we have two pieces of evidence that depict Instagram as a cannibal. Instagram is, quite literally, eating Facebook's young. And Ebersman, when asked specifically about how Instagram users are migrating over to Facebook, also admitted that the social network doesn't yet know how the applications relate to each other.
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Jennifer Van Grove reports on social media for CNET. She previously worked for VentureBeat, Mashable, and NBC San Diego.
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