Facebook Exchange previously was restricted to ads in the right rail, where response rates are a fraction of what advertisers get in the News Feed. The company's decision to make them biddable in real time (blog post) is a validation for the nascent Facebook Exchange, and suggests FBX has become a significant revenue driver for the company.
Marcus Pratt, director insights and tech at Mediasmith, says the move can only increase the amount advertisers will pay for FBX inventory. He pegs News Feed response rates at 10 to 50 times that of ad placements in the right column.
By supporting FBX in the News Feed, Facebook could be laying the groundwork for an expansion of its RTB sales strategy into mobile, "The only ads reaching smartphone users are in the News Feed," notes Pratt. "If the desktop news feed ads are successful, we can only hope that FBX will open up mobile inventory as well."
FBX in mobile could have a significant impact on the programmatic mobile inventory pool, creating real-time ad personalization with Facebook scale and reach. Facebook can also theoretically resolve the cookie-based targeting issues that still plague mobile, since it can map actions to a Facebook ID.
But Facebook spokesperson Elisabeth Diana says mobile RTB is not imminent. "Right now we're focused on desktop. Reason being is that desktop is more in line with what FBX has been doing effectively in the right hand side. And we also find that desktop is the place where more people convert from seeing direct-response ads."
An "alpha" test will initially be open to just three real-time bidding partners – MediaMath, TellApart, and Nanigans. In the coming weeks Facebook says it will expand to other DSPs and their ad customers. In all, 14 companies are certified to bid on FBX ads.
The Feed is a very special place to be, because it's personal -- the type of content that a friend would share naturally. Having FBX become part of it raises the question, how can an advertiser do retargeting in a "natural" way?
TellApart CEO Josh McFarland confirms that his firm is one of the early participants of the alpha and says that it further strengthens Facebook as a major player display advertising. "Getting in the news feed is like getting on anyone's personalized NYT front page," he says.
Another key difference here is that these are likeable and shareable ads and introduce "virality" which the ads on the right hand rail of Facebook pages did not offer previously to FBX advertisers.
John Ebbert contributed.