San Francisco — Microsoft and Facebook have operated together since 2007, but now their relationship is beginning to develop, with both sides sacrificing a little but harvesting more in exchange. As part of the amended agreement between the companies, Facebook is gaining back control over selling the graphical ads that appear on the site while Microsoft, through its Bing search engine, will be gaining exposure on the most popular social network in the world.
Microsoft and Facebook endorsed a deal back in 2007, which saw the former invest $240 million in the latter. For that influx of cash, Microsoft gained the ability to serve display adverts on the social networking site. Now, as part of the mutually revised pact between the companies, Microsoft, will become the exclusive provider of text ads that appear next to search results on the site.
Jon Tinter, general manager of Microsoft’s Bing search engine, said in a blog post that “given the kinds of advertisements that make sense within a product as unique as Facebook, it just made more sense for them to take the lead on this part of their advertising strategy.”
Microsoft helped, selling banner ads throughout the site. But lately Facebook, which is reaching around 400 million users, has struggled to find the right type of ads to show its users. The social-networking titan 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 sequence of targeting and social relevance is the primary driver behind the shift in strategy.”
However, Microsoft — the sole provider of Web search on Facebook — will keep on selling text-based search ads on the website as the two companies extended the arrangement beyond 2011, when it had been due to expire.
The software maker, meanwhile, fetches 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, Tinter, said more of Bing.com would be integrated into the social network.
“As part of this modified cooperation in search, the two companies will soon deliver Facebook users with a more comprehensive 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.
As Facebook attempts to start turning a profit, the huge advertising potential of the site and its colossal number of daily committed users has led Facebook to protect its stake in on-site advertising. On the other end, Microsoft is focusing its attention to Facebook’s search business as the social network tries to emphasize search more on its site.
This brings perfect solution as Facebook knows a lot more about its users and what they’re interested in than Microsoft. And with Facebook ramping up its efforts to learn more about its users all the time, this is only going to become more obvious and relevant.
The news comes as Facebook has increased its focus on its financial performance. This new agreement is the latest replacement of a years’ long partnership between the two companies.
Terms of the new deal were not disclosed. Microsoft invested $240 million in Facebook in 2007. Since then, the companies have partnered on a small number of features, including Web search results.