RTB service with iPinYou to enable US firm to reach more advertisers

Facebook Inc, the world's biggest social networking site, has teamed up with a Chinese partner on real-time bidding (RTB) for advertising on its site, a technology used by Google Inc and other Internet companies to target advertisements to consumers more effectively.

Mark Zuckerberg, Facebook founder and chief executive officer, speaks during the TechCrunch Conference at SF Design Center on Sept 11 in San Francisco. Facebook's Instagram unveiled new terms on Dec 17 that it said would give advertisers more flexibility in using photos.

The move will enable the US-based company to reach more Chinese advertisers who want to place more targeted advertisements on Facebook even though its service is not accessible in China currently.

Facebook is cooperating with Beijing PinYou Interactive Information Technology Co (iPinYou), a Chinese advertisement broker that places advertisers' bids on RTB platforms. It is matching the system of its RTB service, Facebook Exchange, with iPinYou's, said Huang Xiaonan, chief executive officer of the Beijing-based company.

Facebook Exchange enables advertisers to reach specific types of consumers based on their browsing history with the usage cookies on consumers' computers. For example, an Internet user who visited Web pages related to trips to Paris may see advertisements of Paris' hotels and flights later on Facebook.

"There is demand from Chinese advertisers to reach out to US consumers and this is the way how Facebook can cash in on the Chinese market," said Huang. The chief technology officer of iPinYou had in October along with a team of Chinese advertisers held talks with Facebook officials on possible avenues for cooperation.

An e-mail sent to Facebook for more information went unanswered.

There are a large number of Chinese exporters that want to reach international customers, and most of them now use Google to place advertisements, said Hong Bo, a Beijing-based IT analyst and founder of consultancy firm IT5G.

"The most widely-used way for these exporters is to buy keywords on Google because keyword searching is the most directly linked measure of consumers' willingness to buy," he said, adding that Facebook is exploring ways to improve the effectiveness of social advertisements.

Facebook launched its RTB service in the US and Europe in September, a move to make it easier for users to focus on advertisements relevant to them, compared with traditional display advertisements.

Google, which remains the largest player in the online advertising sector in the United States, has a similar service called DoubleClick Ad Exchange. Amazon.com Inc, US biggest online retailer, has also launched its own RTB services, says a report in Adweek earlier this month.

Huang says that the revenue earned by Facebook from traditional display advertisements, measured by cost per thousand price, is 5 to 10 times less than vertical websites. She adds that it is also the reason why the US-based social networking company launched Facebook Exchange to improve the relevance of its advertising.

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