One of Facebook’s Preferred Marketing Developers no longer prefers to continue in the Facebook advertising sector, as Compass Labs CEO Dilip Venkatachari told Business Insider his company was abandoning that business to focus on marketing intelligence.
Venkatachari told Business Insider:
We decided to shift our focus away from social ads and toward leveraging rich insights for marketing. That shift started several months ago, when we dropped the managed ads business, and we finally exited the rest of the ads business recently.
Rationale: While the spend on social ads is growing and will continue to grow rapidly, the intermediaries (i.e., PMDs) are not structurally positioned to get attractive returns. Facebook (and Twitter next) will continue to get an increasing share of the value, leaving intermediaries with diminishing margins. As a player with marquee customers, we got a ringside view of this trajectory. Insights and marketing intelligence, on the other hand, is an attractive, growing market.
According to Business Insider, Compass Labs has 25 employees, and its clients include Honey Bunches of Oats and Febreze.
Readers: Is this an isolated incident, or should Facebook begin preparing for an exodus of PMDs?