Facebook Cranks Up Ad Targeting in User News Feeds

Facebook Exchange Ads Will Start Appearing in Desktop News Feeds, But Not Mobile Yet

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Dawdle on an e-commerce site? Expect ads for that site--even the items you browsed--to stalk you for days, even weeks in ads on other sites. Now those so-called "retargeted" ads are going somewhere else: Facebook's news feed.

Starting today, Facebook will start placing ads purchased through its ad exchange, FBX, in the newsfeeds of users, including retargeted ads from the likes of Zappos, Zipcar, Bonobos and many others as it ramps up advertising in its prime real estate.

The move will give exchange-purchased ads more visibility, and theoretically boost prices across FBX by making the bidding more competitive.

Facebook's exchange allows advertisers to match their own data to Facebook inventory, allowing many types of behaviorally-targeted ads, including retargeting, which is the leading way e-commerce sites make a sale after a shopper has left their online storefront behind.

Facebook's director of product marketing Brian Boland
Facebook's director of product marketing Brian Boland

Behaviorally-targeted FBX ads had formerly only been available on the less conspicuous right-hand rail of Facebook pages, but now advertisers and agencies can buy ads that will show up in users' news feeds via demand-side platforms. (Just three of FBX's 15-plus partners -- TellApart, MediaMath and Nanigans -- have the capability as of today.)

The ads don't include social context from a user's friends, since for privacy reasons FBX is fenced off from Facebook's user data and targeted purely based on users' browsing activity off of the social network.

They also won't show up on mobile devices just yet, but Facebook hinted that's coming, too.

Facebook hasn't revealed how lucrative FBX has been since it officially launched in September, but chief operating officer Sheryl Sandberg did offer up some nuggets about advertiser adoption during the company's most recent earnings call in January. She said then that FBX was serving a billion impressions and 1,300 advertisers per day.

Including more coveted and visible ad real estate could be a means of raising FBX prices, which have been relatively low. In the latter half of 2012, the average CPM -- or cost-per-thousand impressions -- on FBX was 82% lower than for traditional web retargeting, according to the retargeting firm AdRoll.

"More demand will always make the auction more competitive," said Facebook's director of product marketing Brian Boland.

Mr. Boland also observed that FBX ads were being brought to desktop news feeds first (ahead of mobile) because it's a natural migration from the desktop right rail, but also because advertisers' goal in real-time bidding is typically to send people back to a desktop site they've recently visited.

Since they're targeted based on a user's web history, FBX ads are in the domain of the online ad industry's self-regulatory program, which stipulates that behaviorally-targeted ads should disclose their origins and give users an opt-out from tracking. Facebook began complying with the program in February when it developed a way for users to see where right-rail ads came from by clicking on a drop-down menu in the ad. (It's not meeting the same bar as other publishers, however, since the program's "AdChoices" icon isn't currently being delivered in the ad creative itself.)

In the same vein as on the right rail, news feed FBX ads will show the AdChoices icon when users click on a drop-down menu to learn more about the post, Mr. Boland said.

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