If there was any doubt that Facebook is going to be putting the peddle to the metal on its monetization efforts now that it’s a publicly-traded company, those doubts are apparently going to be eliminated very quickly.
That’s because reports have surfaced indicating that the world’s largest social network is on the brink of launching a real-time ad exchange dubbed Facebook Exchange.
According to TechCrunch’s Josh Constine, Facebook Exchange “a real-time bidding ad system where visitors to third-party websites are marked with a cookie, and can then be shown real-time bid ads related to their web browsing when they return to Facebook.” Constine says that Facebook is currently testing Facebook Exchange, or FBX as it’s referred to internally, with eight DSPs, AdRoll, AppNexus, DataXu, MediaMath, TellApart, TheTradeDesk, Triggit and Turn.
Facebook’s goal here is obvious: enable advertisers to deliver more relevant, time-sensitive ads. Bloomberg’s Douglas MacMillan and Jonathan Erlichman note that “if a sports-apparel company wanted to reach fans on Facebook in the moments after the last game of the NBA Finals, they could prepare ads that highlight the Miami Heat and the Oklahoma City Thunder and choose which one to run depending on the outcome of the game.”
But it’s the retargeting aspect of Facebook Exchange that suggests Facebook is finally waking up to the fact that it’s really little more than a display ad company.
The good news for the world’s largest social network is that in accepting that it’s display ad company and better integrating itself into the display ecosystem with appropriate product offerings and partnerships, it can reasonably expect to capture more dollars from marketers.
The bad news for Facebook, of course, is that there’s nothing particularly innovative here. While Facebook Exchange is worth paying attention to, if the company had said two years ago that it would be launching an ad exchange and getting into the retargeting game, it probably would have come as a disappointment. After all, Facebook is supposed to be pioneering innovative new ad models based on the treasure trove of data it has collected from its social graph, not asking you if you want to purchase a Ford vehicle because you recently visited ford.com.
All this aside, the big question, of course, is just how effective ads purchased through Facebook Exchange will be. comScore says ‘earned media’ on Facebook works, but thus far, paid ads have a terrible reputation. Adding new ways to purchase advertising on Facebook won’t necessarily change that.
There’s also the risk that as Facebook puts more powerful tools into the hands of marketers, it will create situations that irritate users. While Facebook has been able to thrive despite the long-standing concerns its users express over privacy, the use of retargeting and techniques like it could make Facebook’s growing omnipresence on the web far more apparent, and that may not be a good thing for the company’s relationship with users.