Facebook Swaps Banners for Search Deal With Microsoft

Will the Social Network's 400 Million Users Help Boost Bing in Its Battle Against Google?

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NEW YORK (AdAge.com) -- Facebook is changing its approach to display advertising and dropping traditional banner advertising, which Microsoft has sold on the social network since 2006. But Facebook is also deepening an existing search deal with the tech company that will put Bing.com results in front of Facebook's 400 million global users.

Bing's general manager, Jon Tinter, said more of Bing.com would be integrated into the social network.
Bing's general manager, Jon Tinter, said more of Bing.com would be integrated into the social network.
Facebook said it would stop running traditional banner ads altogether and instead focus on selling display ads linked to social campaigns, such as Facebook's "engagement ads," and targeting those ads based on user profiles.

"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," the company said. "This combination of targeting and social relevance is the primary driver behind the shift in strategy."

Microsoft, meanwhile, gets a big new distribution platform for Bing as it seeks to gain market share from Google. Microsoft has been providing search to Facebook since 2008, but in a blog post, Bing's general manager, Jon Tinter, said more of Bing.com would be integrated into the social network.

"As part of this expanded cooperation in search, our two companies will soon provide Facebook users with a more complete search experience by providing full access to great Bing features beyond a set of links, including richer answers combined with tools that help customers make faster, smarter decisions," he wrote.

Ending traditional banners
Traditional banner ads are not what big marketers typically want from Facebook, and as users grew from 9 million in 2006 to 400 million today, it flooded the market with banner inventory that brought lower and lower ad rates. Observers argued that by giving up Facebook banner ads, Microsoft isn't losing much, and has a lot more to gain from an expanded relationship in search.

"It's a better deal than they had before," said Kevin Lee, CEO of search marketing firm Didit. "Who wanted that banner inventory anyway?"

Terms of the new deal were not disclosed. Microsoft had been selling Facebook banner ad inventory on a revenue-sharing basis since 2006. Search deals typically involve a lump payment and certain performance guarantees. Microsoft invested $240 million for a stake in the company in 2007.

Searching for community, not stuff
Details on the new search features were thin. Within Facebook, people generally use search to find a personal or community connection -- not the kinds of queries search engines have become very good monetizing. "They are not searching for a product and they are not looking for a purchase," said search consultant Kevin Ryan, founder of Motivity Marketing.

The question is whether the presence of Bing's results in Facebook will have an impact on the way they use search to look for other things on the web. Bing.com just added real-time search, like Twitter results, for example, which could make search a better experience within the social network.

A Microsoft spokesperson said the partnership means Microsoft will provide more than a list of links, but the "full Bing experience ... directly accessible from their Facebook page."

Will it make a difference in Microsoft's battle against Google? "Its not going to win the search war but what it could do is stimulate trial from a big audience whose heaviest users tend to be young," Mr. Lee said.

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