As Facebook Automates Premium Ads, Marketers See Impact On Price

facebook premiumLate last week Facebook released Premium Ad inventory to its self-serve and Ads API channels. By doing so, it intends to relieve the burden of selling these ad types solely from its direct sales force and make them more widely available. But the eventual impact of the move could be more complicated.

For instance, from a campaign cost standpoint, the move -- first reported by AdAge -- could lead to lower prices for some premium ad inventory as advertisers help themselves to ad space that was previously offered only through high-touch, negotiated transactions. And ROI for premium ads may go up as Facebook's 35-plus Ads API partners individually bring their secret sauce to the equation.

Scott Symonds, Managing Director of AKQA Media, believes the impact could mirror the evolution of self-serve ad buying off-Facebook. In other words, price falls as performance rises. AKQA is a Facebook Ads API preferred marketing developer.

"Near term, this may lower the overall effective CPM for self-serve and premium," he said. "We expect that demand and ROI will rise as more and smarter advertisers come onto the platform. CPMs will also rise to the extent Facebook efficacy and transparency earn it."

Making Premium Ads automated may trigger a small flight from negotiated buys, as some advertisers that previously purchased ads directly from the Facebook ads team choose to go through self-serve and API channels now instead – tempted by the lure of convenience, transparency, and lower cost.

From Facebook's viewpoint, this is probably a good thing.

"It is a move that Facebook needs to make… regardless of the potential hit to revenue in the short term," Symonds said. "This will happen for two reasons: 1) Facebook will not be able to ramp its sales force fast enough to manage all the potential buying it would like, and 2) If Facebook does truly deliver ROI in terms of marketing results vs. dollar invested, a bidded API-supported marketplace will be the best way to right size rates over the myriad ad product and targeting criteria offered to advertisers."

The obvious precedent is Google Search, he said, with its potent self-serve model enhanced with direct support to large agencies and advertisers.

A Facebook representative says price considerations didn't factor into the decision. The key thing is getting premium ad space to more buyers.

"We've heard from advertisers that they want easier access to premium inventory and we think opening up the ability to buy premium through our self-service channels accomplishes that. These ads are priced the same as other premium inventory," the spokesperson said.

In true Facebook fashion, the change is propagating quickly on its platform. Certified Ads API partner Upcast Social tells AdExchanger it plans to be live with Premium Ads within days.

From the API partners' perspective, the development is undoubtedly positive – especially after the somewhat painful news that they will need to share access to Facebook inventory with the nine DSPs who've been anointed to power Facebook's RTB Exchange. Might there have been a whiff of appeasement in the Premium Ads move?

Brian Decker, Mindshare's managing director, client leadership, raised it as a possibility. "How the API partners are going to deal with these Facebook Exchange partners is a question that no one has thoroughly [answered]," he said. "This is one way of keeping them happy in the interim."

Facebook has not commented on how much premium inventory it will make available to self-serve/API buyers, nor whether its direct sales folks will have first shot at ad slots before pushing remaining inventory to those buyers.

Symonds indulged AdExchanger with a speculative comment here. "I suspect all inventory will be commonly available to both self-serve/API and direct sales," he said. "Additionally, I would expect direct sales to broadly be priced at a premium over self/API access, with the potential for a reward for premium pricing with priority fulfillment, placement, and/or reach. Whatever reward Facebook wants to give to top bidders at a premium – like Google gives position one visibility and click volume."

By Zach Rodgers

 

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