Facebook Inc. (NYSE: FB) has long been up against a simple problem with Wall Street. Investors who want to know if its revenue can ever reach a point at which the company’s $100 billion valuation can be justified. Recent movement in the stock to record highs would indicate that it has added to its army of faithful investors. Now, it needs to clear another hurdle. Its users, in many cases, resent having messages all over what they consider their private pages — whether or not they actually “own” these pages.

Perhaps, Facebook reasons, if advertising is more relevant, users will be more accepting. The theory is flawed to the extent that members will accept any environment in which there is any advertising at all. Nonetheless, Facebook released a new ad policy:

The goal of News Feed is to deliver the right content to the right people at the right time. Our goal with the ads we show in News Feed is no different.

Every time someone visits News Feed, we choose between thousands of ads to determine the best ones to show – whether it’s from a local business, a well-known brand or a mobile app developer. We aim to show people the most relevant ads based on things such as their interests and the Pages they like.

To choose the right ad, we listen to both people and marketers.

Marketers tell us which people they think will be interested in their ad. For example, a restaurant might tell us to show an ad to people living in the same city aged 18 to 35. Marketers also tell us how much they are willing to pay to show an ad – which suggests how much they want to reach a specific audience.

People also tell us what types of ads they want to see and don’t want to see. When a person interacts with an ad (clicks, likes, comments on, or shares), News Feed learns that these ads are relevant for them. When someone hides an ad, News Feed learns that that person wants to see less of those types of ads.

In addition to improving the quality of the ads themselves, we are also continuously trying to optimize when and where we’re showing ads

We are currently working on some updates to the ads algorithm to improve the relevance and quality of the ads people see.

When deciding which ad to show to which groups of people, we are placing more emphasis on feedback we receive from people about ads, including how often people report or hide an ad.

That means people should see ads that are increasingly relevant to them, and fewer ads that they might not be interested in.

For marketers, this means we are showing ads to the people who might want to see them the most. For example, if someone always hides ads for electronics, we will reduce the number of those types of ads that we show to them.

This means that some marketers may see some variation in the distribution of their ads in the coming weeks. Our goal is to make sure we deliver the most relevant ads, which should mean the right people are seeing a specific ad campaign. This is ultimately better for marketers, because it means their messages are reaching the people most interested in what they have to offer.

We’ll continue to listen to feedback so we can keep improving the quality of ads in News Feed. Stay tuned for more.

Facebook has taken a huge share of the display ad market in the U.S. which has been estimated as high as 25%. Many experts believe this will grow at the expense of market share held by portals and other websites with massive traffic. However, ad relevance remain a huge hurdle for users, which means it is one for marketers as well.

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