Microsoft-Facebook Ad Deal : There’s More To The Story

The blogosphere is abuzz with the news that Microsoft has lost a significant chunk of the advertising partnership that it had inked with Facebook and is renegotiating the deal.

You might recall that all of this follows Microsoft’s investment of close to $240 million in the world’s biggest social network when they also subsequently clinched a deal to display Microsoft ads in some markets.

So why has the deal fallen through now, and is this permanent? The answer is possibly NO to both these questions. Firstly, the Facebook of today is not the same Facebook that Microsoft invested in. When Microsoft pumped its money into Facebook back in 2007, the social network had less than 100 million users. Today, it is inching towards 400 million users. With a diversified user base, Microsoft’s predominantly US-targeted ad network does not make much sense.

However, this might not be a permanent reversal as well. You might remember that Microsoft is working on a social network targeted advertising platform which will promote products to users based on thei product’s recommendations from the visitors’ friends and network. It is possible that once Microsoft launches this technology, Facebook could, in all probability, replace its existing ‘Like’ option on ads with Microsoft’s recommendation feature.

What do you think?