On June 15th, Facebook introduced the real-time bidded Facebook Ad Exchange (FBX). FBX will enable advertisers to reach users based on their browsing histories (via first- and third-party cookies). To illustrate, a user who places products in her shopping cart on a retailer’s site but doesn’t purchase may later see an ad, on Facebook, from the retailer. That ad could promote “10% off” to spur the user to complete her purchase. This significantly broadens Facebook’s traditional targeting options, which are based primarily on information—like demographics and interests—that users provide in their profiles.
To start, FBX will allow advertisers to run only Marketplace Ads (the standard right-side text and photo ads on Facebook) through demand-side platforms (DSPs). DSPs that are currently approved to participate on FBX in beta include AdRoll, AppNexus, DataXu, MediaMath, Tell Apart, TheTradeDesk, Triggit and Turn (not Google’s Invite Media). These DSPs will help advertisers manage real-time bids for Marketplace Ads to optimize to the advertiser’s Facebook key performance indicators. The DSPs will connect with Facebook through a new API; when a FBX impression is available, they’ll be able to bid on it in real-time.
OPPORTUNITY for ADVERTISERS
FBX opens up a huge quantity of high quality ad inventory to advertisers (Facebook now has close to a billion active users). Consider that Facebook has a user base of about 240 billion page views per month, while we accessed—through Performics’ trading platform—110 billion ad impressions in all of 2011. Specific opportunities for advertisers include:
- Engaging Facebook users to complete lower-funnel activities—like booking a flight after searching, buying a product after filling a shopping cart or subscribing to a service after browsing
- Reaching specific customers within narrow time frames, and serving them highly relevant, time-sensitive ads based on recent browsing behavior
- Retargeting participants at Facebook’s massive scale
- Leveraging your existing DSPs to buy Facebook ads—just like you buy other performance-based display ads across the Web
FBX could be a game-changer for Facebook as it will provide advertisers with more effective Facebook advertising. A user’s recent browsing data is more likely to indicate intent to purchase than Facebook’s other targeting options (i.e. profile demographics or interests). Pre FBX, advertisers primarily dedicated branding dollars to Facebook; they were focused on building awareness around their products and services. Post FBX, advertisers can invest more direct-response dollars in Facebook as they’re now more likely to drive performance (sales and leads). Through FBX, Facebook can better correlate Facebook ads to conversions.
The Real-Time Bidded Opportunity
FBX also gives advertisers who aren’t currently utilizing real-time bidded display, or retargeting, an opportunity to test using Facebook’s vast inventory. Real-time bidded display is quickly growing and will be further accelerated by FBX. According to IDC, real-time bidding generated 9.8 percent ($1.07B) of all display ad sales in 2011. Real-time bidding is expected to reach 27 percent ($5.08B) of all display ad sales by 2015.
For search engine marketers, bidded display is a natural corollary; both paid search and bidded display are focused on finding the right customer at the right price, in real time. As display marketers learn more about their audiences, like search, they’re able to bid the right price within the biddable display landscape. The key benefit is engaging a highly relevant audience at the price that delivers your target cost-per-acquisition (CPA).
FBX is just the first step in Facebook’s exchange model. We hope FBX to soon expand beyond Marketplace Ads to premium and mobile inventory. At Performics, we’re excited about this new performance marketing opportunity. FBX enables us to combine our expertise in optimizing real-time, bidded media (both in paid search and on ad exchanges) with our knowledge of Facebook’s audience, garnered through years of running effective Facebook campaigns for our clients.