Facebook in June announced plans to launch a real-time bidded (RTB) ad marketplace allowing advertisers to reach users on the social network based on their browsing history. Through the Facebook Exchange (FBX), users visiting third-party sites can be shown ads related to their travels around the Web when they go back on Facebook.
In short, it's a way for the company to expand advertising beyond its own walls via retargeting. They won't have to rely simply on interests listed in a user's Facebook profile and the pages they “Like” on the social network to target ads.
So Expedia, say, could drop a cookie on the browser of a visitor who researches a trip to Iceland but doesn't actually book travel. Expedia could then bid through a participating DSP (demand-side platform) to show that user an ad for a travel package to Iceland. Such an ad would presumably be more relevant than a more generic travel ad, leading ultimately to higher return on investment.
And higher ROI is what the Exchange is delivering, according to one Facebook ad partner, based on beta testing so far. Retargeting platform AdRoll says that after running 60 campaigns for clients including Room & Board, HootSuite and GoPro since June, ads sold through the Exchange have resulted in 16 times higher ROI on average than the standard Marketplace ads that run on the right side of Facebook pages.
AdRoll declined to provide further details, like eCPMs, click-through rates, cost-per-click in connection with campaigns run through FBX. The company was among the initial group of DSPs selected to trial the system along with AppNexus, DataXu, TellApart, MediaMath, TheTradeDesk, Triggit and Turn.
AdRoll on Thursday announced it will begin opening up access to Facebook inventory to all customers after gearing up its RTB infrastructure to begin serving campaigns more widely. “We've invested quite heavily in our RTB technology, which allows for precise bidding decisions based on users' anonymous browsing behavior,” said an AdRoll spokesperson.
Rocket Fuel and Nanigans are among other social media ad platforms announcing their support for FBX. Others added to the original group of Exchange parters include Criteo, Optimal, Xaxis and X+1, according to TechCrunch.
With FBX, we’re excited to help all of our customers improve the reach and performance of their campaigns through Facebook’s massive inventory supply,” said Adam Berke, president of AdRoll, in a statement. Facebook accounted for about 28% of all display ads served online last year, according to comScore.
In a research report earlier this month, JP Morgan analyst Doug Anmuth estimated that site retargeting generally carries a CPM of $2 compared to Facebook's U.S. CPM of about 45 cents. He estimated a 2%-3% gain in Facebook's U.S. ad revenue for each 1% of its impressions that are sold through FBX.
In addition to Facebook's top line, the Exchange is expected to benefit direct response marketers especially by opening the door to ads more focused on demand fulfillment than raising brand awareness. But more information about results and costs from early campaigns may be needed to help convince advertisers to get on board en masse when the Exchange gets beyond the test phase.