6 Ways Facebook Exchange Changes Advertising

By Will M 

Facebook Exchange Partnerships Manager Josh Butler spoke about the social network’s real-time-bidding ad exchange to media buyers, agency trading desks, and brand marketers at OMMA‘s Real-Time Buying summit in Century City, Calif., last Thursday.

FBX is an ad exchange that lets advertisers buy ads on Facebook on an impression-level basis. Millions of FBX ads are bought and sold individually, every second.

RTB-based ad exchanges are growing in influence in the ad world. Facebook’s launch of its RTB exchange made waves in the industry, as FBX debuted with a huge amount of ad inventory in what was previously a small niche in the ad market.

Facebook started FBX last June, and it came out of beta last September.

Following are six ways FBX changes the advertising sector:

  1. Facebook doesn’t sell FBX: FBX is not sold directly. FBX partners do all of the selling. This is similar to the Preferred Marketing Developers program for Facebook ads. Current FBX partners are listed on Facebook, and they are all experts in RTB advertising.
  2. FBX is bring your own data, optimization, and measurement: Facebook sees FBX as form of self-service advertising. In order to protect user privacy, marketers don’t get access to any of the Facebook user data that can be used to target through the Facebook ads application-programming interface. Marketers on FBX are getting direct access to the same second-price marketplace auction that they get through the rest of Facebook’s self-service interfaces. However, FBX partners are the ones that provide all of the data, optimization, and measurement.
  3. FBX is for direct marketers: Brands are heavy users of Facebook ads, as they want to make consumers aware of their products and create engaging experiences for Facebook users. Direct-response marketers are driven by return on investment. Direct marketers only care if someone buys their product at a low adverting cost. DR marketers will typically buy as many ads as is profitable, and FBX is designed for this market.
  4. FBX has only two ad units: FBX ad units are limited to a small one that appears in the “right rail” of Facebook pages. The social network recently launched FBX ad units in the News Feed, as well. Facebook offers a variety of social and mobile ad units, and FBX is just a small subset.
  5. Retargeting is the No. 1 tactic on FBX: Facebook exchange is designed to help marketers achieve direct-response goals by incorporating non-Facebook data into their ad-buying decisions. FBX advertisers use first-party and third-party data to decide who to serve ads to. First-party data refers to the cookies that websites and ad networks put on users’ browsers, and third-party data is information collected by research firms and data brokers. Facebook anonymously matches users’ profiles with advertiser profiles in retargeting campaigns. When users visit car company sites, car banners start showing up on the pages they visit.
  6. FBX is not a social ad product: Facebook does not optimize FBX ads for social campaigns, and the company said they are not effective in getting likes or building community. FBX ads are simply display impressions running at extremely high volume across the platform. While FBX ads have the classic “like this” and “share this” options, the direct-response marketers that are FBX’s main clients don’t care about social engagement data — only whether their FBX ads resulted in sales.

Facebook Exchange is certainly a unique ad product for Facebook. It will be interesting to see how it continues to coexist with the rest of the social network’s ad products ecosystem.

Marketers: Have you ever tried running FBX ads?