Supplier of the Year: Facebook

Whether Facebook is or is not “the” social network is a matter of debate. But there is little question about how it is leveraging its presiding position among social media users and advertisers alike: It wants to dominate the whole digital world, not just “social.” And it took two big steps in 2014 — launching the Facebook Audience Network and relaunching the Atlas ad server — to do it. Both moves give it the potential to greatly extend Facebook’s reach off its own pages and screens to become a dominant — potentially the dominant — player across digital media screens.

The moves are part of a progression by Facebook to monetize how brands reach its users — increasingly in ways that are off Facebook altogether, but which leverage the power of the data it has about its users in a way no one, maybe not even Google, could achieve.

They also come as Facebook has increasingly altered its algorithms to decrease the number of unpaid ad impressions brands can serve to Facebook users while increasing the ways they can do it through Facebook’s own programmatic audience buying exchanges. This is something some agencies and brands have complained about, although most continue to invest increasingly bigger budgets in.

The first move occurred in April when Facebook unveiled its new “audience network” as part of a suite of new offerings at its annual developers conference. Basically, the new network enabled Facebook to extend the reach of the audiences it can sell to advertisers beyond its own pages and screens to any development partner — including mobile app creators, social games, and anyone else who develops an audience related to Facebook.

While Facebook never disclosed its splits with its network partners, it basically operates the way most ad networks do: aggregating the audiences of disparate publishers and developers into massive reach that can be sold to big advertisers and brands.

Even as agencies and brands began salivating over the potential of unlocking all that new audience reach, Facebook’s team was already working on the relaunch of Atlas, a moribund ad server it acquired from Microsoft in 2013. While people scratched their heads at the time, puzzling over why Facebook would need an ad server, much less why it would purchase one that had grown out of industry favor (it reportedly paid Microsoft $100 million, a relative pittance), the reasons became abundantly clear when it announced its re-launch in November.

By leveraging data for registered Facebook users, the relaunched Atlas could serve ads targeted at specific consumers without the need of cookies. Aside from being a potential “post-cookie” solution for advertisers, the relaunched Atlas tied to Facebook user profiles and social graph data meant brands could target ads to consumers with precision across mobile, tablet, and other devices that don’t rely on browser-based cookies.

In the days and weeks that followed, agency executives began mumbling phrases like “Google killer,” because they saw Facebook’s new ad serving technology as not only a solution for getting around browser-cookie based targeting, but because it might be a way to finally offset the dominance Google’s Doubleclick has on that market.

“Google’s targeting is based primarily on cookies,” explains Michelle Lynn, executive vice president-managing director of Dentsu Aegis Network. “Now Facebook is offering people-based audience-buying. They’re still targeting people based on their online behaviors, but they don’t need a cookie to do it.”

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