These aren't the social, brand-focused "sponsored stories" that
appear in user news feeds, but the display "marketplace" ads that
appear on the right rail, the closest thing to traditional ads on
the social network.
Facebook Exchange will debut in the next few weeks, and eight
DSPs and retargeting firms will be cleared to buy the inventory:
TellApart, Triggit, Turn, DataXu, MediaMath, AppNexus, The Trade
Desk and AdRoll, according to spokeswoman Annie Ta.
The third parties will sync the cookies they've dropped on users
with a Facebook cookie to anonymously serve ads to users, but no
Facebook targeting options can be layered on top of their buys.
Advertisers will only be able to tap into the inventory through the
eight third parties, said spokeswoman Annie Ta. News of Facebook's
exchange was first reported by Bloomberg.
AdRoll President Adam Berke said the arrangement with Facebook
will operate much the way that company's retargeting of first-party
traffic on Google, Microsoft, or
Yahoo's display networks currently works. "We think it's going to
add a lot of value to Facebook inventory the way it's added value
for other display inventory sources," he said, noting that
retargeted ads tend to have higher click-through rates.
But it's not just about retargeting someone who may have visited
a brand's site and is now logged onto Facebook; it's also about
reaching segments of people whose demographic profile is a match
with the typical buyer of the brand's product or service.
Advertisers want to target people in those segments in real time
wherever they are on the web. But they haven't been able to reach
those people on Facebook up to now with a single cross-platform
media buy, says Mike Baker, CEO of Dataxu. "Facebook's sort of been
a walled garden up to now," he said.
The launch of Facebook Exchange also represents a sea change in
Facebook's attitude toward advertising, since the company has
historically urged marketers to buy ads that point within Facebook
for purchases. It's also significant since Facebook's IPO roadshow
was all about touting the performance of socially-layered and
premium ad products, with marketplace given relatively short
"It's opening up ad inventory to performance-type advertisers
like Amazon and Ebay who
want to direct advertisers back to their websites to make a
purchase," said eMarketer
principal analyst Debra Aho Williamson. "We bash the marketplace
side, but clearly they think there are legs to it. This business we
love to hate maybe is more important than we thought."
Dave Williams, CEO of the Facebook Ads API partner Blinq Media,
thinks the move is an opportunity for Facebook to drive up the
value of its effective CPMs, since it has the potential to make
bidding on the platform more competitive and also to increase the
perceived value of ads to the bidders on the back end. "As
advertisers are able to get closer to that user intent and further
down into the purchase funnel, it's going to drive up conversions
and also the value of the inventory," he said.
The matching of Facebook's user data with outside sources is
sure to raise privacy issues. Facebook said users will be able to
opt out of ads from specific third parties, though not out of
seeing display ads bought with third-party data altogether.
"Between the additional data and real-time bidding, this should
make buying on Facebook more efficient and targeted," said Bryan
Wiener, CEO of 360i. "The
challenge will be balancing increased targeted with potential