Facebook Insists FBX Isn’t Getting Cut From Its Growing Ad Stack

david fischer industry preview 2015Despite the amount of attention Facebook Exchange generated when it was released way back in 2012, today it’s mostly focused on retargeting desktop users. Consequently, some ad industry insiders are skeptical of its future.

When asked directly about FBX’s future at AdExchanger's Industry Preview conference, David Fischer, Facebook's VP of business and marketing partnerships, said there were no plans to end it. A Facebook spokesperson reiterated that stance to AdExchanger.

Later, Fischer spoke to AdExchanger about keys to maintaining FBX’s longevity.

“The key determinant of the health of the product is the number of people using it and the effectiveness they’re finding in it,” he said. “We still hear from many marketing partners that they find a lot of success in FBX and they invest in it. As long as that’s the case, we think there’s a nice opportunity.”

But Fischer added a caveat: “There are opportunities to use Facebook Custom Audiences, which for some partners could be even more effective.”

Custom Audiences is Facebook’s ad tech crown jewel, designed to enable advertisers to reach a set group of people, like lapsed customers or website visitors, or to perform lookalike targeting.

This isn’t to say FBX doesn’t still have its uses. Retargeting platform AdRoll, an alpha partner for both FBX and Facebook’s Web Custom Audiences (which lets advertisers target consumers who’ve visited their websites), supports both.

In a March blog post, AdRoll solutions director Sean MacMannis laid out FBX’s value prop. For instance, the exchange supports dynamic creative, has reports that show the value of attributed conversions and ad tech partners hooked into FBX can also add targeting and segmentation capabilities to each buy.

AdRoll CMO and president Adam Berke acknowledges that FBX has evolved since its inception. Since the advent of Custom Audiences, FBX is no longer the only way for advertisers to apply their first-party data to Facebook inventory.

“In the longer term, marketers will always want to bring their own data sets to Facebook whether it be first-party, third-party or some combo of data sets and there will always be some segment of advertisers that will want to be able to apply their own customized bidding algorithms,” Berke said, adding that these capabilities are most easily enabled through FBX’s RTB environment.

“Finally, the beauty of RTB is that since it's an open standard, it allows you to unify your campaigns across platforms,” Berke said. “For example, advertisers often want to apply global frequency caps regardless of where they serve the ad. With FBX, it's easy for an advertiser to say, ‘I only want to serve five impressions per person per day whether that's on Facebook or other website and have that type of restraint applied to their campaigns across inventory sources.’”

Jeff Green, CEO and founder of The Trade Desk – which was also an FBX alpha partner – said Facebook has more inventory than most publishers, and faces similar challenges on how to monetize it. The open exchange concept is valuable because it helps support "economic principles of liquidity and transparency."

"Regardless of the news or rumors coming out about Facebook, there are market forces that should signal to them that the auction will overtake direct sales," he said. "Any step away is a step backward."

Still, FBX's value has changed and continues to change. Consequently, so does its place in the Facebook ad stack. And of late, it seems Facebook’s focus is on nurturing its Custom Audiences products, whose functions increasingly overlap with FBX’s, or rolling out its Atlas ad serving and measurement product to more partners. (Fischer wouldn’t reveal how many clients use Atlas.)

The Big Video Opportunity

Facebook is also becoming more of a content provider, particularly with video, where Facebook views itself as a discovery mechanism – one of the reasons it eschews pre-roll but enables post-roll, notably with its partnership with Verizon and the NFL through which it hosts football clips in the news feed.

“People are discovering videos as they scroll through their news feed. So seeing the video you’re discovering first is really important, as opposed to when you go watch a specific video the way you might on YouTube,” Fischer said.

On the video content front, there have been reports that Facebook hopes to attract YouTube creators. What could it offer to this crowd?

“Unparalleled distribution opportunities in terms of the number of people on our platform, the amount of time people spend – more than five minutes on mobile and more than nine minutes on desktop – is very compelling,” Fischer said. “And when people come to Facebook, they’re in discovery mode, so getting onto [the] news feed and being discovered there is very powerful.”

Facebook is also increasingly aware of its importance to publishers, primarily as a referral engine, and developments in this front could have advertising implications. (For instance, if Facebook were to host articles rather than direct users to publisher pages, how would this affect purchase of ads and distribution of ad revenue?)

So given all of these grand initiatives, how important is FBX?

“It’s most effective with straight-up retargeting capabilities,” Fischer told AdExchanger.

FBX is only a small part of Facebook’s ad tech and provides only desktop inventory on Facebook. Yahoo’s Right Media exchange expanded beyond Yahoo-owned sites, but that inventory quality degraded to the point where Yahoo pulled the plug.

AdRoll’s Berke, when asked about the current quality of FBX inventory and whether it was buying the same amounts for clients as it did when the exchange first came about, simply stated: “Facebook is a crucial inventory source for us and our spend continues to grow there because it performs and provides a platform for us to build on in a variety of ways to deliver value for our customers.”

2 Comments

  1. It's interesting that you're using the comments I heard first hand to rebut my summary of those comments. Everything in my tweet accurately summarized what Fischer said, and then I added the editorial "Dead", which I stand by.

    Reply
  2. Hi Ari,

    There are many who questioned FBX's longevity (I singled out your comment because it was public and prominent), which is why we brought up the subject during Industry Preview.

    After the talk, I sought further elaboration from Facebook about its stance on FBX, and to contextualize FBX within its greater ad strategy.

    As Facebook stated, there are no plans to kill FBX. Does that mean it never will, that it will always be valuable to marketers, or that it currently has and will continue to have Facebook's support and investment? Of course, opinions vary.

    Reply

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