Facebook scoops up Atlas. More social ads incoming?

Facebook bought Atlas, an advertising tracking and management company, from Microsoft this week for an undisclosed sum. Facebook is likely hoping to improve the precision of its own ads, and perhaps to launch an ad network to rival Google's.

Paul Sakuma/AP/File
Facebook purchased ad company Atlas from Microsoft this week, and could be working on creating its own ad network. Here, a mural at Facebook's California headquarters stylizes the code on which the social network runs.

Facebook has a mountain of data on its users’ activities, locations, and other data -- which allows it to serve up advertisements that are pretty narrowly tailored to individual tastes. Now that ad-focusing ability could get even better.

On Thursday, the company announced it will buy Microsoft’s “Atlas,” an business that helps companies buy, manage, and track ads.

What will Atlas do for Facebook? Neither company has laid out specific plans yet, but the first part of the theory is that better data will lead to more advertising dollars. Facebook has been working for a while to increase its ad revenue -- especially on tablets and phones -- and Atlas brings some powerful data tracking features to the table, which would allow Facebook to better measure how effective its ads are.

Peter Kafka at AllThingsD predicts (based on intel from “smart folks who have some skin in the game”) that once Facebook can prove the value of its ads, it’ll be able to increase ad pricing.

This is important to Facebook, because Atlas is a direct competitor to Google’s ad service -- and right now, Google is eating Facebook’s lunch. DoubleClick can better quantify the success of its ads, and because of this, lots of companies choose to advertise with Google (which means the company can charge more for ads). Atlas could give Facebook the same kind of leverage.

Atlas brings another strength to Facebook: It lets advertisers target ads even more closely, based on the social habits of Facebook users. In other words, advertisers will be better able to understand the relationship between the things you do (as captured by Facebook) and the things you buy, and can capitalize on this information. Eventually, this could lead to Facebook developing an ad network and selling ads outside of its own site. And because the company has such a vast amount of data on what things people are sharing and “liking,” a Facebook-driven social ad network would likely be pretty effective.

Atlas has been around for awhile. Microsoft acquired the company in 2007 when it bought the advertising firm aQuantive for $6 billion. That purchase proved to be ill-fated: Microsoft ultimately wrote off most of the acquisition cost, and has apparently been trying to sell Atlas for some time. In October, Jason del Rey reported in AdAge that Microsoft was working to sell it to New York ad company AppNexus.

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