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Facebook's Ad Strategy Finally Catches Up to Google's

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Facebook (FB) is looking to increase its advertising revenue by incorporating a new sales strategy that experts think has a real chance of working. Why such optimism? Because the technique has been proven to work, over and over again, by their competitors, who must have been amazed it has taken Facebook this long to do it, ReadWriteWeb reports.

The program, called Facebook Exchange, works by allowing potential advertisers to bid on highly targeted ads -- something that Google (GOOG), Yahoo (YHOO), and AOL (AOL) have been doing for years.

Through the Exchange, Facebook will follow each user who doesn’t log out after visiting the site and tracks where they go next. If someone visits a site that sells DVDs but doesn’t buy one, an advertiser like Amazon (AMZN) can bid for the opportunity to post an add in that person’s Facebook the next time they log in.

As long as someone doesn’t log out, Facebook will be able to grab an enormous amount of data regarding each person’s online behavior. And now, with more and more users logging into third-party sites with their Facebook logins, these type of ads will only be getting more personal and direct.

The targeted ads, which are expected to be on the right side of the page for 900 million users, were part of the reason the company was initially valued at $100 billion (now at $58 billion). No word on why it’s taken them so long to implement this strategy, but certainly not because they were worried about being accused of using people’s private information for gain.

Another curious element about this whole deal is the fact that Facebook is not even setting up the program themselves, instead they’re relying on third-party brokers who will be tracking users and their behavior.

If this disturbs you, then get ready -- you’ll have plenty of time to “Like” all the inevitable statuses coming your way complaining about this.
POSITION:  No positions in stocks mentioned.