Facebook embraces the mobile app version of header bidding

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Credit: Illustration by Tam Nguyen/Ad Age

Facebook, looking to grow its ad business outside its own apps, has struck partnerships that enable it to plug into ad auctions run by ad exchanges like MoPub—owned by Twitter—Fyber and Max. Facebook can now also work directly with publishers like Rovio, Talefun and GameInsight, which manage their own ad auctions, and turn on ad demand from the Facebook Audience Network.

Alvin Bowles, Facebook's VP of Audience Network, says the new app ad bidding is similar to header bidding, which is a way for websites to auction ad space in real time to competing ad networks. Apps can't technically engage in header bidding, but they can increase competition for ad space by plugging into more demand sources, like Facebook Audience Network.

"It's a bidding system that enables publishers to conduct real-time auctions between ad sources," Bowles says. "The ad network that's willing to pay the most amount of money wins."

Facebook Audience Network was opened in 2014 as a way for publishers to use the social network to directly fill their apps and websites with ads. It has evolved over time, however, with Facebook using it to work with ad tech partners in ways that don't require heavy lifting from the app developers and publishers. Facebook struggled over the years needing to convince publishers to change ad tech partners, disrupting how they already do business.

"We're not asking publishers to do anything different," Bowles says. "They have in-house, third-party ad tech pipes established, and we're simply looking for an opportunity to bid on that inventory."

Facebook does not have an agreement to work with Google's AdMob, so it does not have access to bid in all the major mobile ad auctions.

Offer Yehudai, president of Fyber, said that 85 percent of time spent on mobile devices is in apps as opposed to the mobile web.

"It's time the various players in the in-app space join forces to create a cleaner, more transparent app monetization ecosystem," Yehudai wrote in an e-mail statement.

In-app ads are a lucrative business. Even Apple is considering revving up its ad business with a mobile ad network that could deliver ads to top apps like Snapchat and Pinterest, according to a recent Wall Street Journal article.

In-app advertising accounts for 80 percent of the ad spending on mobile devices, which amounted to $45.3 billion in the U.S. last year, according to eMarketer.

"Facebook is sending a strong signal that the third-party developer environment is attractive," says Michael Deignan, global head of programmatic at Vungle, an in-app video ad platform. "It's a sign there's a lot here in this market."

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