Facebook takes charge of banner ads from Microsoft

Facebook will take complete charge of display ads on its website, ending its deal with Microsoft, which will, however, continue to sell text-based search ads on Facebook from next month, when Facebook introduces its revamped home page.

Facebook feels taking over its own display ads, would enable it to handle the ads better as it has access to personal information about its users, and has been selling its own ads on user's profile pages, while Microsoft sold banner ads in other sections. Another reason for the shift is that Facebook's cash flows have started covering costs ahead of expectations.

"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 in a statement. "This combination of targeting and social relevance is the primary driver behind the shift in strategy."

The Facebook - Microsoft deal started in 2006. In 2007 when the software giant made a $240-million investment in Facebook for a 1.5-per cent stake (See: Microsoft pips Google to acquire a stake in Facebook), and the ad deal was extended and was to have run till 2011.

Microsoft will continue to handle the web searches for facebook beyond 2011.

It will further integrate its search engine Bing into Facebook, in a bid to expand its reach outside the US.

Facebook is the leading social networking website and will cross 400 million users shortly.