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Facebook ranks first in display ads

By Cecilia Kang

Facebook has become an online advertising magnet, capturing the greatest number of display ads of any Internet publishing site in the third quarter, according to ComScore.

In the third quarter, Facebook grabbed 23 percent of all Internet display ads, or 297 billion ad impressions, which was more than the total display ads on Yahoo, Microsoft, Fox and Google sites combined. But that doesn’t mean Facebook made the most money from display ads, according to the ComScore report.

Facebook ads are generally cheaper than display ads sold on traditional Web portals like Yahoo, according to Evercore Partners analyst Ken Sena in a report by Reuters. One industry source said Yahoo is known to make the most from online display ads.

The effective CPM (cost per thousand impressions) for Facebook's U.S. display ads is roughly $1, compared with the $3 CPM for display ads on Yahoo's family of Web sites in the United States, Sena said.

The growth in advertising shows the value of Facebook’s social network to advertisers who want to tailor ads to users who are constantly feeding new information about themselves to the site. Facebook doesn’t share personally identifiable information about their users, it says. And lawmakers have introduced legislation that could curb an advertiser’s ability to serve up ads based on Internet user activity. (Disclosure: Washington Post Co. Chairman Donald E. Graham is a member of Facebook's board.)

Overall, the online advertising display market is up 22 percent compared with a year ago.

Jeff Hackett, ComScore’s senior vice president, said in a release that the growth comes from the ability to target ads, or “buy specific audiences,” and that the site has improved the creativity and formatting of the ads.

Top advertisers – cellphone providers AT&T and Verizon -- bought a combined 35 billion ads. Scott Trade bought about 14.9 billion ads, and cable industry buster Netflix bought 9.5 billion ads in the quarter.

By Cecilia Kang  | November 9, 2010; 2:01 PM ET
Categories:  FTC, Facebook, Google, Privacy  
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I'd like to ask a question that may seem somewhat snarky, but I am very curious about. Why are these ads called 'display' ads? What other kind of ads do websites 'display', other than 'display' ads? Things like this bug me like crazy...

Posted by: jjtwo | November 9, 2010 3:45 PM | Report abuse

jjtwo - The main difference is display vs. search. So display ads are the banners, panels, and towers you see, say, when you're reading an article The idea is that they show when a page displays, or loads. Each time an ad shows when a page loads counts for one "impression."

Search ads are a different matter - they are tied to keywords. So when a user types in a word or phrase on a search engine, these are the text ads you see on the right.

There's a billing difference too. With display, you buy x number of views for a given site or group of sites. If you judged the audience correctly and your creative is compelling, you get clicks and your click-through rate (CTR) is good (a pretty good CTR is generally in the .1 - .2% range, depending on the site).

With search, you essentially bid on a search term each time the engine returns a result. So very popular searches ("Lady Gaga," say) have very high bids. However, you actually pay your bid only when someone clicks on your ad. In practice, a media planner will set aside $500, say, and a click will cost $1. So you buy 500 clicks - often, if such an ad is performing well, you'll increase the budget as the metrics (click-through rates, etc.) come back. That's why advertising on Google is often seen as a win-win - you only pay when someone actually clicks your ad.

Posted by: crozetproject | November 9, 2010 8:28 PM | Report abuse

I use adblock on Facebook. I really have no interest in seeing piles of advertisements for women with huge fake boobs. I don't like their advertising methods, and I refuse to participate.

By contrast I don't block ads on the Post's site as well as others I frequently look at.

Posted by: Nymous | November 9, 2010 8:39 PM | Report abuse

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Posted by: goodlucky88 | November 9, 2010 9:12 PM | Report abuse

Just to add to crozetproject's response on Display Ads for the previous commentor; the term "Display Ad" originated from print media such as newspapers. Display ads were typically larger bordered messages versus classified ads, which were composed of a few lines with much smaller text and cost considerably less to run.

Posted by: tgoodrich | November 10, 2010 5:52 PM | Report abuse

Facebook sux. Hopefully, they'll continue to screw around with people's "privacy settings" to the point where people will flee in droves.

Posted by: rg019571 | November 14, 2010 6:18 PM | Report abuse

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