NEW YORK – Last week, Facebook (NASDAQ:FB) announced that they were going to reduce the number of advertisements that users do not want to see. While the announcement did not surprise some analysts, the reasons for making the announcement were unclear.
According to the company, newsfeeds will contain fewer advertisements for products or services that do not interest users. However, the company did not say they will decrease the number of advertisements, but rather the advertisements should be more aligned with a user’s interests. Since this summer, Facebook has been adding one advertisement for every 20 posts that a user sees in their feed.
Essentially the announcement reinforces that Facebook’s users are the product and the company will be using refined data mining and other techniques to determine what advertisements we want to see in our newsfeed. Eventually, this refined approach could produce higher revenue per advertisement as well as Facebook could guarantee a higher likelihood that the target audience will use an advertiser’s product or service.
This is what makes Google’s (NASDAQ:GOOG) advertising model very strong as the internet behemoth knows almost intuitively what users are interested in. Even to the point where Google knows what is crossing your mind at this point and can so serve you up an ad on that specific subject.
Up to now, Facebook has been unable to do this as most users do not utilize Facebook for search. However, removing non-pertinent advertisements from a user’s new feed appears to be a step in the right direction – unless you are worried about your privacy, which in that case you should not be on Facebook to begin with.
But why announce it, as the move seems almost second nature for an advertising company that is how to make the best use of their ad space.
While on Monday, the company announced they would begin sending weekly reports to the country’s four largest television networks in an attempt to offer a glimpse of how much chatter their programming is creating. The reports will show how many ‘actions’ a particular show or episode inspired – actions include, comments, likes, and shares. The move is seen as a direct assault against Twitter who has been increasingly seen as the source for real-time data on current events.
Share in Facebook are up more than 34 percent for the year and closed at an all-time high of $ 50.39 on Friday.