There has been no bigger news this year in the world of digital advertising than the launch of Facebook Exchange (FBX). The implications are many. It opened up a gigantic pool of inventory in the hottest sector of ad tech: programmatic buying or, more specifically, retargeting. Furthermore, it brought together Facebook API buyers and DSPs in a way that companies are still trying to figure out, and overnight, it created competition, in terms of attention and dollars, for Google’s advertising juggernaut, DoubleClick Ad Exchange.
Now that it’s been almost five months since AdRoll and a handful of other tech companies have joined the FBX alpha, we thought we’d share the key things that we’ve learned about this exciting new channel.
There’s a New Audience to Reach
Simply put, Facebook has massive reach - over 1 billion monthly users. For a retargeting campaign, where every user is extremely valuable, FBX allows advertisers to reach more of the hyper-valuable users than ever before. This is great for larger advertisers who want more optimization levers (i.e. day parting, user value based bidding, etc.) but it’s also a boon for smaller advertisers who need to reach every single possible prospect that has shown an interest in their products.
Scott Shapiro, Facebook’s Product Marketing Manager, recently mentioned in a webinar that users with targetable info on Facebook are not usually the same users generating intent data for advertisers across the web. This means that the audiences that marketers can now reach through FBX are almost entirely incremental to their existing Marketplace advertising efforts. Scott goes on to say that Facebook’s data suggests that the overlap in impressions from an advertiser’s existing marketplace ads with new FBX campaigns is in the low single-digit percentages.
The Inventory is High-Quality
When it comes to retargeting, FBX is like buying Beluga caviar at Costco. There’s not only tremendous volume, but also an exceptionally high-quality product. All impressions are above the fold and remain viewable regardless of how the user scrolls. This solves the perennial problem plaguing online advertising: “are people even going to see my ad?” Also, the ad units are in predictable locations, helping to eliminate accidental clicks.
Less obvious, but perhaps more important, users often visit Facebook without a set agenda. This means that they can be inspired to do other things quite easily, like complete a purchase for an item they had view earlier, but got distracted from buying (maybe because they had logged in to check what their friends were up to on Facebook).
These factors combine to deliver extremely high-quality clicks. On FBX, it’s common to see click to conversion rates of 8-10%, while it often hovers around 4-6% for standard display ads.
Creative is Extremely Important
Though this point is true for standard display advertising, because of the volume and available frequency of FBX, having an intelligent creative strategy is even more important. This shouldn’t be stressful - it can be an exciting opportunity for advertisers.
With performance statistics from your retargeting provider, you should be able to empirically determine better performing calls-to-actions, and ad copy, quickly.
Additionally, technology like dynamic creative can automate testing and iteration, making ads increasing click through rates by displaying specific products a person might be interested in based on products that they’ve browsed in the past.
There’s Still Lots to Learn
Real-time bidding (RTB) on FBX requires different bidding strategies than with standard display. We need to take into account page type (profile, photo, group, etc.) and expected slot number, in addition to weightings of variables like frequency and recency. Refining bidding algorithms to take all of this into account takes time and data.
Five months is still very early in the development of artificial intelligence that will take these variables into account and drive maximum campaign performance - compared to the many years that companies have worked with standard display RTB.
Advertisers are still getting their feet wet with FBX, but the initial results and feedback are overwhelmingly positive. In a recent report, eMarketer predicts “over the next few years, RTB will continue to gain momentum and share of ad dollars - accounting for a quarter of the display market in 2015.” FBX, they say, is a crucial component for that growth.
From what we’ve seen thus far, nothing else that launched in 2012 will have as big an impact on marketing strategy and media plans in 2013 than Facebook Exchange.