Facebook Exchange to allow companies to bid for ads in real time

Facebook plans to introduce real-time bidding system for advertisements that will be dubbed as Facebook Exchange, reported technology blog Techcrunch. This ad system will allow advertisers to bid for specific users on the social networking site based on their browsing history.

According to Techcrunch, visitors to third party websites will be marked by a cookie and they will be shown ads related to their web browsing the next time they return on Facebook; thus allowing the social networking site to show more targeted advertisements.

Facebook has been facing questions over its revenue generation strategy post initial public offering and the direct advertising brought in by Facebook Exchange might finally bring it some respite.

Facebook noted in a remark to Techcrunch that it is currently testing the system and it will become available more widely in the next few weeks.

In a separate report, Bloomberg stated that the prices of these ads will be based on the cost per thousand viewers and the spots will be sold via third-party technology partners.

Facebook places cookies on internet browsers of the site users to help the partners identify them and the same cookies will be used to track the web browsing of a Facebook member. Currently, there is no way to opt out of this tracking on Facebook, but Bloomberg notes that outside vendors will give users a chance to block cookies.

According to Facebook, the idea behind Facebook Exchange is to let advertisers show users more relevant ads. The social network has been traditionally viewed as place for institutional or brand advertising and not a place for direct marketers. Facebook Exchange is an attempt to change that.