Facebook takes back display ads from Microsoft

Mon Feb 8 2010, 17:50 PM UTC

Facebook is taking back control of its display ads from Microsoft but extending a deal to let Microsoft manage text-based search ads. Facebook says it can increase the value of the display ads by targeting them based on user data and featuring interactive elements. Microsoft's Bing will continue to be the exclusive search provider on the social network, maintaining Microsoft's foothold in the crucial web property.

Deal Details

Facebook previously served only a portion of display ads on the site. It maintains its own ads are better targeted and feature interactive elements that are more likely to engage users. "Ad formats that feature social actions perform better and provide a better user experience since they are more consistent with the look and feel of Facebook," says the company. "This combination of targeting and social relevance is the primary driver behind the shift in strategy."

The original ad deal between Microsoft and Facebook dates back to 2007, just before Microsoft bought a 1.6% stake in the social network for USD240m. The revised deal will see Microsoft extend full features from Bing to Facebook searches, as well as extend Bing search to Facebook users outside the US. Microsoft GM Jon Tinter describes the move as an "expanded cooperation in search".  Facebook has progressively placed greater emphasis on its search functions, with the social network's recent redesign placing search at the heart of its home pages. 

Bing on Facebook is part of Microsoft's larger strategy to take on Google in search. A search partnership with Yahoo! will effectively give Microsoft an almost 30% share of the US search market. Strengthening ties with the world's biggest social network further increase Bing's reach.

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