It will work when marketers affix tracking software -- which is
being offered to direct-response marketers -- to their
websites and apps.
A likely carrot for advertisers to try Facebook's new type of
"custom audiences" -- an existing category of ad targeting that
enables marketers to use their own customer data like email
addresses and phone numbers to match corresponding Facebook users
-- is that mobile inventory will be available. By comparison, FBX
placements are constrained to desktop news feed and ads in the
Custom audiences can also be further refined with standard
Facebook targeting -- like gender, geography, age and marital
status -- which also isn't possible for FBX.
Advertisers looking to target customers who mulled a purchase on
their site but didn't complete the transaction have thronged to
FBX, due in large part to the size of Facebook's active user base.
And some DSPs are generating a lot of revenue from bidding on
Facebook impressions that will be shown to their customers'
prospects. For example, AdRoll last week announced it had
hit a run rate of $100 million and cited FBX as an
Facebook's cut of FBX, on the other hand, wasn't such a big
business as of July. Chief operating officer Sheryl Sandberg said
during the company's second-quarter earnings call that FBX
accounted for "a very small part" of Facebook's
But if more direct-response marketers use Facebook native
retargeting technology, the social network wouldn't have to share
the revenue with partners, meaning it would contribute more to the
company's top line.
Targeting beyond FBX
Facebook product marketing manager Scott Shapiro said that he
envisions distinct use cases for FBX and the new custom audiences.
Since mobile ads can be delivered through custom audiences, he
described a hypothetical scenario of Nordstrom showing mobile app
engagement ads to people who already have its app installed and had
previously used it to peruse shoes to urge them to open it
He also said that custom audiences can serve the exact same
function that FBX has largely fulfilled: reminding users of a shoe
they'd considered buying and linking back to the site where they
can complete the purchase.
One facet of FBX that custom audiences can't replicate is the
ability adjust the creative shown in ads according to the behavior
of the user, Mr. Shapiro said. Facebook's tool also won't have the
element of "predictive buying," where a person who's been looking
at a set of pink dresses might be shown an ad for red shoes because
algorithms predict an affinity.
"That's the number-one reason to keep using FBX," he said. He
noted that existing budget allocations and work flows are other
Mr. Shapiro says he foresees advertisers using both FBX and
"A travel client will use FBX to retarget people who've gone
searching for hotels and then show them that exact hotel [they
saw]," he said. "They'll use custom audiences to reach people who
are searching for hotels but have not downloaded their mobile app
on iOS 7 on iPad."
As with FBX, desktop ads targeted through Facebook's tracking
will be marked with the blue triangle of the ad industry's
self-regulatory "AdChoices" program, which provides disclosure and
the opportunity to opt out from behaviorally-targeted ads. (It's
visible when users click on the upper-right corner of ads to learn
more about them.)
Mobile ads targeted based on tracking won't contain the icon,
but a Facebook spokesman said "it's something we're working on and
will come soon."
An opt-out option
Facebook will also offer user an opt-out from targeting based on
its own tracking of website and app visits. (This doesn't include
FBX, however; users will still have to opt out from DSPs one at a
time if they want to ensure that they see no retargeted ads at
Mr. Shapiro wouldn't rule out opening up mobile ad inventory to
FBX in the future but said that infrastructure for real-time
bidding on mobile is nascent, and Facebook won't be the company to
work out the kinks with measurement and also privacy. He noted that
Facebook opted to build FBX -- which officially opened for business
in September 2012 -- when the real-time bidding market was already
"We launched our exchange three years after a lot of exchanges
launched," Mr. Shapiro said. "They proved a lot of the mechanics
out, figured out a lot about how real-time bidding should work.
When we decided to do it, we did it very quickly."
~ ~ ~
CORRECTION: An earlier
version of this story incorrectly stated that FBX ads are targeted
using marketers' customer data like addresses and phone numbers.
It's actually Facebook's existing category of ad targeting, "custom
audiences," that can match marketer CRM data to Facebook users. We
regret the error.