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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.  

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.

Adam Berke

Published 10 December, 2012 by Adam Berke

Adam Berke manages AdRoll's Account Management team.

1 more post from this author

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Christina

While a lot of other partners are still experimenting with FBX, Triggit's already developed sophisticated features to get the most out of your 'beluga' - we were the first to offer large scale dynamic creatives and optimization for FBX for large direct response advertisers across five continents. Fine tune your beluga ad for any segment including your high-end consumer, environmentally conscious purchaser, or beluga caviar tasting dabbler. Once you have your dynamic creative, optimize it against any page type on Facebook.. maybe you can get even more stellar performance on Photo pages vs. Newsfeed pages. Have a booming beluga caviar business in Latin America or Eastern Europe? No worries there as well - Triggit can retarget internationally (most partners still can't to date). Advertisers *need* to be aware that a partner that really has done their homework on FBX wasted no time in creating the features, tools and transparent reporting to boost your ROAS even more on this massive new channel.

over 3 years ago

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Geo George

FB will focus extensively on promoting brands to create more content on Facebook itself e.g brand pages , groups apps and mashups so that the audience stay in the FB network.Next best thing they do is try to get the best out if FB mobile users. third FB Will launch a richmedia platform and strat investing big time into performace analytics search and big data with focus on Video Content - Contributer is a Digital stategist with an IT majoy

over 3 years ago

Manoj Kumar

Manoj Kumar, Analyst at Wipro Technologies

Fb definitely seems to be moving in that direction, Geo.

over 3 years ago

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, Engaging Networks

Is it just me, or is this post so full of jargon I can barely understand it? Any chance you can make a seperate post for those new to media buying (like this noob here, clearly) or edit to take out the buzzwords?

over 3 years ago

Adam Berke

Adam Berke, President at AdRoll

Geo & Manner - it'll definitely be interesting to see how Facebook innovates and evolves in the coming year. As you can probably tell, we're super excited about the opportunities to leverage real-time bidding (RTB) across Facebook.

Anonymous @ Engaging Networks- apologies if this post came off too jargony. Earlier last month, we put out a "new to Facebook Exchange" article. Check it out here - http://blog.adroll.com/reengage-customers-facebookexchange - and let us know if you have any further questions!

over 3 years ago

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Mike M

If you are a company in the B2B space, it's been a tough go on Facebook not being able to target people by industry or job title. That has changed ! Bizo is now able target individuals in that exact way. It's tough to find such granular targeting at such a low CPM. Mahoney@bizo.com

over 3 years ago

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