Facebook is making an update to its ads on the right-hand rail of desktop screens: they will be bigger, but there will be fewer of them.
It's a facelift with the potential to make right rail ads -- known for lower click-through rates and a boxy, text-heavy format -- more lucrative for Facebook. The new ads will be a little more than twice the size of the current rendition and sized in the same proportion as news feed ads so that marketers can use the same images in both, which they weren't previously able to do.
While the right rail itself won't get bigger, ad images will soon span most of the width of it to be more visually impactful, while previously they had taken up less than half. Where current users see seven right-rail ads (at the higher end of the range), they will soon see about three. Where they see three of them, they will see one or two.
Global rollout of the new design to users will begin in late April and should be complete by the end of the summer, according to a Facebook spokesman. Rollout to advertisers will also begin later this month.
Until early 2012, the right rail was the only place to advertise on Facebook, but the launch of news-feed ads on desktop and mobile have driven revenue growth ever since. They fetch higher prices, are clicked on at a much higher rate, and are much more difficult for users to ignore. One of Facebook's most popular ad formats -- mobile app installs -- is only available in news feed.
During the company's fourth-quarter earnings call, Chief Financial Officer David Ebersman observed that the average effective price per ad had increased by 92% over the previous year, driven by news feed adoption.
Data from the Facebook ads partner company AdParlor bears out the swift migration of ad dollars from right rail to news feed over the last three quarters. Right rail-specific placement accounted for 27.2% of Facebook spend managed by the company in the third quarter of 2013; that had dwindled to 8.1% during the first quarter of 2014.
Right rail-specific placement was still accounting for 68.5% of AdParlor's impressions in the first quarter, however.
There's currently a glut of inventory in the right rail, but it's not nearly as lucrative as the news feed. So Facebook is apparently fixing to have less of it but to make what it does have more valuable.
Early tests of the new design have seen three times more engagement, according to a Facebook blog post. If the new ads are clicked on more, they'll presumably have a lower effective cost per click for advertisers and fetch higher CPMs for Facebook. Whether users mind having more conspicuous ads on their desktop screens remains to be seen.
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