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Facebook’s new advertising play: Selling ads for non-users

Facebook
An employee at the Facebook campus in Menlo Park, Calif., in 2014.
(Jeff Chiu / Associated Press)

To advertisers, Facebook Inc.'s biggest treasure trove is what it knows about you.

Anything from your age to where you went to school to your favorite band can be treated as a data point that the social network can use to display highly specific advertisements. With this wealth of personal information on its 1 billion daily active users, Facebook has steadily increased its advertising revenue.

But now, Facebook will start serving ads beyond the 72% of American adults who used the social network last year.

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On Thursday, the social media giant said it would expand its ad network of third-party apps and sites, which it calls Audience Network, to let advertisers reach people who don’t use Facebook.

Previously, only Facebook users who visited these apps or sites saw the ads.

The move is a new beachhead in Facebook’s fight for dominance in online ad sales against Alphabet Inc., Google’s parent company. Google controls 33.3%, representing $53 billion in gross revenue, of the worldwide online ad market, mostly through search. Facebook controls 10.7%, or $17 billion, mainly on its own platform.

“If you can capture the rest of that audience, and do what they say is a better job of delivering relevant messages to them, then why not go for that?” said Gary Wilcox, professor of advertising at the University of Texas at Austin.

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But the approach seems contrary to Facebook’s strengths, one analyst said.

Google aggregates information about Internet users through their search history, but Facebook gets information directly from their users — what pages they choose to like, what geotagged photos they post of themselves and what they list as interests.

“Facebook is valuable because of what they know about their users,” said Jason Helfstein, managing director and Internet analyst at Oppenheimer & Co. “It’s even more personal.”

In a blog post, Facebook said it would make sure that it shows relevant ads to non-users by relying on information from third-party apps and sites that use Facebook technology.

Those ads will probably not be as relevant as the ones targeted to Facebook users because of the lack of such information, Wilcox said. But that might not be the point.

“It’s not really so much about comparing it to their Facebook ads,” he said. “It’s about comparing it to whatever else is out there.”

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samantha.masunaga@latimes.com

For more business news, follow me @smasunaga


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