Facebook Shuts Down Its Ad Exchange: Implications for Advertisers

Intent Lab
Uncovering Intent through the Digital Satisfaction Index™
July 29, 2016
Intent Lab
The 4 Factors of the Digital Satisfaction Index™
August 1, 2016

Facebook Shuts Down Its Ad Exchange: Implications for Advertisers

Industry-Alerts-5

With insights from Kevin Theodore, Media Director

FBX, a real-time ad exchange, was launched in 2012. The platform allows advertisers to create retargeting campaigns through Facebook. But, Facebook announced that as of November 1, 2016 it will shut down FBX as it pursues a move into mobile with additional products. According to Adweek, Facebook is already beginning the process of migrating clients over to mobile.

WHY IS THIS HAPPENING?

While Facebook is shutting down FBX, it’s ramping up to improve and maximize efforts to launch and focus on mobile products. Consumers are using Facebook less on desktop as a large portion of social media usage and Internet browsing is being conducted on mobile. According to eMarketer, the number of smartphone Facebook users will continue to grow, catching up to the overall number of general Facebook users, which is slowing down YoY.

facebook users

At the same time, mobile ad spend is gaining ground; eMarketer projects double-digit growth in the U.S. through 2019, to $69.15B.  Mobile spend currently only trails TV.  And Facebook is positioning itself to win the mobile battle vs. Google.  Facebook is already besting Google in mobile display ad revenue ($8,439M Facebook v. $2,733M Google in 2016), and is close to overtaking Google in overall mobile revenue ($12,388M Facebook vs. $13,355M Google in 2016) (eMarketer). 

IMPLICATIONS FOR ADVERTISERS

Facebook’s plan to shut down FBX only furthers the notion that mobile is rising in the ranks of digital. In fact, according to the Wall Street Journal, Facebook has recently been reducing the number of clients using FBX, pushing them to use FAN (Facebook Audience Network) instead.

Primarily, this change will have positive implications for advertisers:

  • Relevancy of Content: FBX was mainly shut down for its irrelevance and lack of valuable inventory. Facebook is seeking to create relevant advertising experiences. Moving into a mobile space makes the most sense right now as more and more consumers leverage Facebook through their smartphones and tablets, rather than desktops.
  • Playing into Consumer Intent: Facebook’s audience is gearing towards mobile, with the ability to constantly check Facebook and related apps on-the-go. Because of this, Facebook is pushing its clients to invest dollars into mobile advertising platforms, playing into the idea of intent. Consumers want information and interesting content delivered to them at the right moment. Facebook’s focus on mobile advertising will allow advertisers to create more meaningful connections with their target audience.
  • The Launch of FAN: The recent launch of FAN has likely accelerated the FBX shutdown. This propels Facebook into the world of display, native and mobile advertising outside of Facebook, therefore creating an additional revenue stream. Facebook is well aware of their extensive user base along with the amount of data available and its value. Facebook has not only been collecting data, but its users also voluntarily provide it. Additionally, Facebook may continue to offer its data segments at no cost, making it very difficult for other third-party providers to compete.

However, there are a couple downsides to the elimination of FBX:

  • Third-Party Partnerships: Third parties that overlaid data that was previously tapped into FBX will now be required to work in partnership directly with Facebook. This may create some hiccups between existing partners that utilized FBX while creating partnerships through API connections.
  • Loss of Tracking: Facebook has been making a push of its ad server, Atlas, since its push to compete with DoubleClick. However, it has yet to gain much traction. With the loss of FBX, advertisers will lose view-through tracking in powerhouse ad server DoubleClick when utilizing Website Custom Audiences. Advertisers that were using first-party data with FBX previously had that luxury.

Some advertisers relied solely on FBX. The platform acted as a stepping-stone for advertisers to enter the social world—as most were familiar with display and could easily access Facebook’s inventory through the same platforms. Migrating away from FBX will open up more of Facebook’s tools for advertisers, such as: Ad Formats, Facebook Data Targeting, Device Targeting, Dynamic Product Ads, Access to Instagram, etc. This may be troublesome for particular brands initially, but being pushed into a mobile space and being exposed to many of Facebook’s tools may maximize their marketing efforts.  

To learn more about advertising with Facebook, contact Performics today.


Comments are closed.

Performics Newsletter

[raw]



[/raw]