Early Stats on How Facebook Exchange Ads Perform in News Feed

Pricier at first but better value

It was easy money to bet that matching up what is arguably Facebook's most valuable ad offering with its most valuable real estate would pay off. But only a month after Facebook began testing retargeted Facebook Exchange ads within users’ desktop News Feed, the positive returns are beginning to roll in. 

“In early tests, the performance [of FBX ads run in the desktop News Feed] is dwarfing [their traditional right-rail counterparts],” said Marc Grabowski, COO of social ad firm Nanigans, one of three companies to first test FBX News Feed ads.

Compared to FBX ads run in Facebook’s easily overlooked right-hand side, FBX ads run in the desktop News Feed saw 48.4 percent lower cost-per-click, 197.3 percent higher return on investment and 17 times higher clickthrough rates, Nanigans found in examining the handful of clients who have run FBX News Feed ads. Those early stats should sway most FBX holdouts, beefing up the exchange beyond the more than 1,300 advertisers it attracts daily, advertisers that serve more than 1 billion impressions per day.

Now Facebook has extended its News Feed ad test to more FBX partners. The demand-side platform Triggit has tried them out with “handful of clients globally,” per CEO Zach Coelius. So far, its' been worth the price.

“Early indications are [the cost per thousand impressions] for News Feed ads are quite high. They’re many times higher than what marketers have been paying in the right rail, but the performance is many times better,” said Coelius.

Not only are the FBX desktop feed units bigger—expanding the Page Post Link Ads units to feature a bigger image and more text in addition to linking back to the advertiser’s site—they can also last longer. Adam Berke, president of retargeting firm and FBX partner AdRoll, pointed out that News Feed ads are basically bought on a per-insertion basis. That is, if a user sees a News Feed ad when checking Facebook on their work computer and then the same ad again when checking Facebook on their home computer, the advertiser only pays for the initial impression, no matter how many times the same user sees it.

And there are also free earned impressions to be had. Similarly to the right-rail placements, the News Feed adds social actions like likes, comments and shares to each FBX ad. That new viral aspect extends FBX ads’ purpose beyond their original intended purpose of driving product purchases and into the realm of brand advertising.

With News Feed ads, “you only pay for the initial insertion and get bonus free additional impressions if users go to different [desktop] devices [to check their feeds] and free social impressions if you generate something cool,” Berke said.

FBX ads in the News Feed might also give a boost to their easily overlooked counterparts on the right hand of the page. “The data we’ve seen so far indicates that right rail plus News Feed is additive,” Coelius said, explaining that “showing people ads in the News Feed gets them to click on ads in the right rail at higher rates.”

Of course for FBX ads to drive these benefits, FBX advertisers still have to make it into the desktop News Feeds in the first place. For that they face stiff competition as more brands flock to the feed; 65 percent of the platform’s advertisers run spots in the feed, COO Sheryl Sandberg said during the company’s fourth-quarter earnings call. That leaves advertisers with the choice of whether to compete for the hotter property and pay the consequentially higher initial prices or keep content with the right-rail.

“Demand for the right side is probably going to stay or [progressively] move over to the News Feed as performance increases,” Grabowski said. “The only reason not all demand would move over is because there’s not unlimited inventory [in the News Feed].” Therefore the right rail provides eyeball insurance. Facebook could increase News Feed inventory to accommodate the added demand (and risk agitating users), but there’s still the potential of prices being driven up. Not that advertisers would likely be driven away.

“In many ways all the other stuff done in FBX has been practice for this. This is prime time. This is going to probably be as much of a must-have ad unit when it comes to using Facebook as anything,” Berke said.

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