Ads on the Facebook Exchange have lower costs per click and costs per impression, but web retargeting has lower costs per unique and better clickthrough rates, a recent AdRoll study has found.

AdRoll also found that there was little overlap in audiences reached with FBX and web retargeting, indicating that advertisers should employ both to maximize their retargeting efforts.

AdRoll looked at 468 advertisers who ran campaigns on standard display and FBX in the last six months of 2012. On average, FBX offered 82 percent lower CPMs and 70 percent lower CPCs than web retargeting. However, cost per unique was 86 percent higher than elsewhere on the web, and clickthrough rates averaged 40 percent lower. Web display ads are much larger than Facebook ads, and they often include rich media, whereas Facebook ads are static and mostly text.

AdRoll found that only 8.3 percent of uniques — or 10.75 million out of 130 million — were reached by both FBX and web retargeting. This suggests that advertisers should be running campaigns through both in order to reach a more complete audience.

In a blog post on the topic, AdRoll wrote:

“Our research showed that both web retargeting and Facebook Exchange have their strengths and are incremental to one another. We found that by leveraging both platforms for retargeting campaigns, advertisers can maximize their return on investment. To do otherwise would be leaving money on the table!”

Article courtesy of Inside Facebook

“Do we want to bet the company on this?”, CEO Zach Coelius asked his advertising tech startup Triggit when it got a shot to work with Facebook’s ad exchange. It took the chance, raised $7.4 million, and now FBX is performing 36% better than Google’s ad exchange, according to data Triggit released today showing it may have hit the jackpot. Triggit’s revenue is up 300% since it jacked into FBX.

For those less familiar, FBX is Facebook’s cookie-based retargeted ad system that launched in June 2011. It lets advertisers drop cookies on people who visit their site, say to look at a pair of shoes they might buy, then target them with ads on Facebook promoting those same shoes to get them to go through with the purchase.

Retargeted ad exchanges like Google’s AdX have been around for awhile, and many advertisers have big retargeted ad budgets that Facebook wants to tap into. Some think FBX could become one of Facebook’s core revenue streams because retargeting lets it reach users who’ve shown purchase intent even better than search.

Advertising technology companies called demand side platforms work with advertisers and help them buy huge retargeted ad ampaigns. They collect cookies from advertisers so when one of their site visitors goes to publisher sites like Facebook, the DSP makes a real-time bid to show them a retargeted ad.

Triggit was in business for seven years working with Google, Rubicon, Admeld and other retargeting exchanges before FBX launched. It was nearing profitability thanks to scalable technology that let it buy billions of ads a month, and innovative features like the ability to scan an advertiser’s website and automatically turn into ad headlines and images.

When Coelius got the offer to be one of the first DSPs with access to FBX, he knew Triggit could leverage its technology to take advantage of the opportunity, but it had to work fast to get a head start. So despite the risk that users might hate retargeted ads on Facebook, Coelius tells me Triggit put “100% of its focus” on FBX. To accelerate development for FBX, in November Triggit raised a $7.4 million Series B led by Spark Capital and Foundry Group.

Triggit’s bet is panning out. By the end of November it had seen its revenue increase 300% in the five short months since it started working with FBX. And today it released a new set of stats indicating just how well Facebook Exchange is performing for advertisers. The data is even more convincing than a few stats from several DSPs that we published about early FBX trials in September. AdRoll saw 16X return on investment; TellApart saw a 6.65% click through rate compared to 6.41% on Google’s AdX; and Triggit got 4X higher profit, 2.2X higher post-click conversion rates, and 6.5X lower cost per click-through order than on other ad exchanges.

New Data Shows FBX Is A Winner

Based on six weeks of data about 76 million ad viewers, Triggit found that people are 240% more likely to a return to an advertiser’s site after they’re retargeted with ads for that site on Facebook. 60% of the time, people saw a retargeted ad on Facebook for a site they’d visited less than an hour ago thanks to incredible time-on-site and return visit frequency Facebook gets.

FBX ads are performing much better than standard, static Facebook sidebar ads. Retargeted ads with dynamic creative that relate to what a user browsed on an advertiser’s website got 43% high click through rates, delivered conversions for 1/3 of the price, and converted users 30% faster than static ads, according to two campaigns Triggit ran for a major online retailer.

Most interesting, though, is how Facebook Exchange stacks up against Google’s ad exchange and others. Triggit ran a campaign with half the ads purchased through Facebook Exchange and half on other exchanges including Google’s AdX, Rubicon, OpenX, and Pubmatic. Users who saw Facebook Exchange ads were 36% more likely to convert (for example, make a purchase) than users seeing the campaign on the established ad exchanges.

If FBX continues to perform better than competitors, it could suck up significant amounts of advertising spend, and turn into a huge money-maker for Facebook. In the meantime, it seems Triggit anchored itself to the right boat. It earns revenue on each ad it runs for its clients.

Coelius tells me the goal is to use retargeting to make ads actually relevant, and change the way the world perceives them. He says “Facebook has the power and the potential to make ads stop being bad and start being good, and make the people who are unhappy with advertising realize its not interruptive.” Instead, if FBX can show products people actually want to buy, ads can even be useful.

Advertising has gotten a bad wrap, but its actually the lifeblood of the consumer Internet. It lets everything from important communication utilities like Facebook to fun games become viable businesses. Coelius concludes that “If Triggit can get to where we can bankroll the Internet and make people happy. That’d be awesome.”

Check out my interview with Triggit CEO Zach Coelius below, and watch as we discuss how FBX could make an even bigger impact if Facebook opens it up for mobile advertising. 

Article courtesy of TechCrunch

After eight years focused on user growth and building the foundations of its platform — News Feed, location and Open Graph, among others — Facebook went into 2012 prepared to go public and become more serious about monetization.

The social network launched several new ad types and began a number of other potential money-making ventures. Here’s a look at Facebook’s monetization efforts last year and how they might evolve in 2013.

News Feed/Mobile Ads

News Feed ads, starting with Sponsored Stories, launched in January. These same ad types came to the mobile feed in March, and over time, the social network began allowing page post units and other non-social ads. Mobile app installs came to the feed in August. Facebook previously allowed feed-based ads in 2007 but it had never shown ads on mobile devices until this year. Now, the social network is earning $4 million a day from News Feed ads, with three-fourths of that from the mobile feed. Advertisers themselves are pleased to have more prominent inventory, which generally leads to higher clickthrough rates and lower costs per click. In 2013, Facebook is likely to put more ads in the feed and continue to tinker with their design to optimize performance and improve user experience. We’ve heard a new video ad unit is already in the works.

Facebook Exchange

Facebook introduced its Facebook Exchange, a real-time bidding system that allows third-party platforms to place retargeting ads on the social network after users visit external websites marked with cookies. FBX came out of beta in September, but only a limited number of partners have access to the exchange. Expect this number to grow in 2013. Early partners are reporting lower costs per acquisition than on other exchanges, and many advertisers are pleased that their ads appear above the fold and on brand-safe pages, which is not always the case with other exchanges where advertisers can’t be sure where their ads are being placed or how many others they’re competing against. The Facebook environment is much more controlled. Retargeting data cannot yet be combined with Facebook’s demographic and psychographic targeting options — nor can it be used for social ads like Sponsored Stories or page post ads in News Feed, but many expect these will become features of FBX in the future. TechCrunch recently reported that Facebook may be looking to bring FBX to mobile.

Facebook Gifts

Two years after Facebook shuttered its virtual gift shop, the company unveiled Facebook Gifts, a desktop and mobile feature that allows U.S. users to buy physical and digital goods for their friends. Because the recipient enters their mailing information, the sender doesn’t need to know a friend’s address. Companies like Starbucks, Apple, Gap, Brookstone, Mondavi Wines and Fab.com are already selling items through the platform, but 2013 will likely see even more high-profile retailers signing on. We can also envision the Gifts platform eventually opening to third-party developers so Facebook could power the gift-giving flow and payments experience on other sites and apps. Currently, Facebook is curating its catalogue, taking photographs, writing copy, designing packaging materials and other activities that could require a lot more manpower as it scales its offering. A platform approach might be more lucrative in the future, though perhaps not as soon as this year. In 2013, look for Facebook to improve its recommendation engine and begin promoting gifts based on users’ status updates, not just birthdays and life events.

Promoted Posts

In May, Facebook began testing Promoted Posts as a way for page owners to reach more of their fans and friends of fans through News Feed posts without having to create campaigns in the main ad dashboard. Instead, page owners can click the Promote button on their posts before or after they make them. This has since rolled out to most pages on the social network and replaced the Reach Generator program. Facebook announced that more than 300,000 pages promoted 2.5 million posts between June and December.

Around the same time that Promoted Posts came to pages, Facebook began testing a similar feature for users’ personal profiles. Users can pay a few dollars to promote their status updates and other posts to the top of friends’ feeds. After a limited test in New Zealand, this was rolled out to the U.S. in October. It generally costs about $7 to promote a single post, which seems a bit steep. The company is likely continue to experiment with this product in 2013 to find the right price point and experience for users and their friends.

Offers

Offers are a new story type for pages to post coupons that users can collect from News Feed or ad units. Unlike check-in deals, which required users to first visit a physical location, offers can be redeemed in-store or online. Although this started off free like other page posts, it is now a paid feature. Pages must spend a minimum of $5 to post and promote their offers. The price increases if pages want to reach more fans and their friends.

Sponsored Results

In July, Facebook introduced “Sponsored Results” ads that allow advertisers to promote their business in the social network’s drop-down search results. Rather than broad keywords, advertisers bid against specific pages, apps or places. Facebook’s other demographic and interest-based targeting can be layered onto these ads as well. However, with Facebook’s current search product, users don’t have the same level of intent as they seem to with search engines like Google. This ad type will likely take form as Facebook evolves its search feature.

Logout Ads

Facebook began offering large premium ads that display on the logout page, immediately after Facebook users log out of Facebook using their desktop web browser. These ads still can only be purchased by working with Facebook directly, and they come with a price tag equivalent to takeovers on sites like YouTube or Yahoo. Advertisers like Microsoft, Ford, Samsung, 1-800 Flowers, Subway and others have used this ad type, but many others have expressed doubt about the value of reaching users after they’ve left the social network. Facebook will have to share some results or do more to convince advertisers that this unit is worth it.

Paid Messaging

Just before 2012 ended, Facebook announced a small test that allows some users to pay to send direct messages to another user’s inbox rather than their “other” folder. Senders whose messages would have appeared in a recipient’s “other” folder will be prompted with the option to pay $1 to have the message routed to the inbox instead. If the sender chooses not to pay, the message will still be sent but not to the main inbox. For now this is a limited test among U.S. users and it is not open to businesses or pages. We could see Facebook expand on this test or introduce a variation of the product for advertisers in 2013. We’ve seen hints in Facebook’s code that this could be in the works.

Subscription Payments

Facebook announced in June that it would phase out Credits in favor of a user’s local currency — dollars, pounds or yen, for example. The social network also began to support subscription billing for apps on its platform. Zynga and Kixeye have been offering subscriptions for premium game experiences, but we haven’t seen other apps use this aspect of the platform. In 2013, Facebook is likely to change its fee structure for Payments — taking less than 30 percent for some apps — which could encourage more non-game applications to use the system. Facebook also announced a beta test for paid applications in May, but the social network hasn’t said anything about this since then. The company didn’t reveal which developers were part of the beta, and it’s unclear whether the test is still going on. We could hear more about this in the new year.

Other Opportunities

Mobile Ad Network

Facebook began a test in September to allow its unique targeting data to be used for mobile advertising in third-party apps and sites. This seemed like the beginnings of a mobile ad network, but the company later said the test ended in December. Facebook says it is focusing on its own native mobile ads for the time being. AllThingsD and Business Insider reported that the social network was considering buying Microsoft’s Atlas platform, which could put the company in a better position to launch an ad network in the near future.

Premium Services

Facebook Chief Operating Officer Sheryl Sandberg said in October that the company is looking at opportunities to sell premium services for businesses. Sandberg didn’t offer any specific examples, though based on job listings posted to Facebook’s careers site over the past few months, we’ve suspected that the company could be making a play into providing CRM or data management solutions. In March Facebook added a listing for a Software Engineer, Sales/Marketing Tools to work on “inventing the future of Social CRM” and “develop a suite of applications for large advertisers, media agencies, and Facebook’s global sales force.”  In August, we saw Facebook put out a call for Product Marketing Manager, Monetization: “an expert in data management platforms” who will ”develop our plans and vision for how we can enable businesses to better reach their customers and prospects on Facebook.” Look for some of these solutions to debut in 2013.

Collections

In October, Facebook started testing a Pinterest-like feature called “Collections,” which allows retailers to post product photos with buttons to save the items to a wishlist, as well as links to buy from their sites. The first test, which included seven retail partners, ended later in the month, but Facebook began another test in December with 14 retailers. We’ll likely see the full rollout of the product in the first half of 2013, and we expect this to be a paid product, similar to what Facebook has done with its Offers posts.

Nearby

In mid-December, Facebook launched Nearby, a local search and discovery feature in its iOS and Android apps. Users can search for specific places, browse categories or see broadly what’s around them, organized by their friend’s recommendations, check-ins and other social cues. We could see Facebook offer sponsored listings so businesses can be highlighted in different sections of the app or appear higher in search results.

App Center/PMD Center

In Spring 2012, Facebook launched App Center, a personalized dashboard that aims to improve app discovery across the web and mobile devices by sorting Facebook-connected apps by category and user ratings. In December, the social network revealed PMD Center, which serves as a directory of companies, tools and apps for social marketing and advertising. Both of these areas lend themselves well to native advertising, though they don’t offer this yet. Facebook may eventually allow apps to pay to be featured more prominently or let PMD companies sponsor their profiles or specific case studies on the site.

News Feed Modules

Facebook has brought several new modules to News Feed, including ones for Suggested Events, Upcoming Concerts, Recently Released Albums, Recent Articles and New Music By Artists You May Like. We suspect Facebook will continue to test new features like these, which use Open Graph data and other cues to generate stories that don’t come directly from friends.  Upcoming events, recently released albums and other similar features could easily be options for ads in the future. For instance, there could be an “Upcoming Films” unit for new movies, a “Happy Hour” module for nearby bars and restaurants or “Ongoing Sales” for retailers or online stores. Businesses could pay to be featured among other organic recommendations.

Article courtesy of Inside Facebook

Facebook today paused the test of its mobile ad network, which lives in other apps that it splits revenue with, and reapplying resources to its mobile feed ads. Freed-up staff could work on bringing its lucrative FBX ad exchange to mobile. In fact, Facebook is already looking into the option, says sources. FBX mobile could boost earnings and get $FB above its IPO price faster than an ad network.

Today’s news doesn’t mean the mobile ad network that entered beta in September wasn’t going well. It’s a massive opportunity for Facebook because it lets it earn money without cluttering its own user experience with ads. Developers are finding that by using Facebook info, such as age, gender, location, and interests to target ads within their apps, they’re getting much better performance. Facebook stressed this in its statement about shuttering the test for now:

We are pausing our mobile ads test off of Facebook. While the results we have seen and the feedback from partners has been positive, our focus is on scaling ads in mobile news feed before ads off of Facebook. We have learned a lot from this test that will be useful in the future.

Facebook has notified all the partnered app developers and advertisers of the shut down and will honor commitments for campaigns through the end of the year. The fact is that since an ad network brings in lower margins because revenue has to be split with the developers who host the ads, getting it to the scale where it would really move the needle for Facebook could take time. The company wants to surpass its $38 IPO price as soon as possible to show it’s still strong and attract top talent. To do that it needs more revenue and profit.

Still, far from being dead-pooled, expect the off-app ad network to come back with a vengeance. It won’t be the first time Facebook has paused a test to rework something before a bigger launch. It’s Pinterest-style Collections feature recently had its test shut down, but Facebook later clarified that this was to improve the product before making it available to everyone in the future.

In the meantime, the engineers, product managers, and other team members who were working on the mobile ad network will be reassigned to work on Facebook’s mobile news feed ads. Business for those is booming, as developers are lining up to get a spot in the feed where ads take up most of the screen and get a user’s full attention. Facebook has to keep up with demand and make sure it’s serving the most relevant ads possible.

If revenue is what it seeks, my bet on what the reassigned engineers, product managers, and salespeople will work is making Facebook Exchange ready for mobile. [Update: In fact, I've learned that Facebook has been asking the demand side platform partners that run FBX ads whether bringing retargeting to mobile is feasible. These developers believe it could take a while to build, as long as a year, so it would make sense that Facebook would need additional resources to get this going.]

Right now FBX ads are only appearing in Facebook desktop’s right-hand sidebar, but early results show the real-time bidding system for re-targeting ads based on cookies is crushing it. FBX takes someone’s browsing history and turns it into ads, so you might see an ad for a flight to Hawaii that you looked at but didn’t buy. But as we all know, people are increasingly accessing Facebook from mobile, so that’s where FBX needs to go.

Accomplishing this could be a huge windfall for Facebook that would give it a leg up on other mobile advertising companies and make the shift to mobile actually a good thing for the social network.

Cookie-based re-targeting creates a profile of someone’s desktop web browsing, and doesn’t work as well or at all on mobile. But since you use the same Facebook login on the web and mobile, Facebook could tie your desktop browsing history to your mobile identity and deliver the re-targeted ads there. That could mitigate another problem that Facebook has — annoying users by showing them more mobile ads. If the ads are for things people actually want to buy, they don’t seem as invasive.

Everyone’s expecting FBX to soon be a major driver of Facebook’s revenue growth. Getting it on mobile could stomp on the gas. The ad network can wait.

Article courtesy of TechCrunch

Social ad network RadiumOne today announced that it has joined the exclusive group of approved platforms integrating with the Facebook Exchange.

Facebook has about 20 partners selling retargeting ads through FBX, a real-time bidding system where advertisers bid on each ad impression as it is served. RadiumOne’s distinction is its “ShareGraph,” which ranks, scores and evaluates social sharing connections across the web. The company offers sharing products, po.st, re.po.st and via.me, that help it create unique audience segments that take into account data beyond what happens directly on an advertiser’s website.

The Facebook Exchange is a key area of growth for Facebook and the companies that build upon it. Triggit, for example, just raised $7.4 million in large part because of FBX.

In a press release, RadiumOne CEO and founder Gurbaksh Chahal said, “FBX is one of the most meaningful innovations in the advertising space.”

eMarketer reported last week that overall RTB spending is expected to nearly double this year, and the maturation of the Facebook Exchange likely to be a key influence on future growth in the industry, which could reach more than $3.3 billion next year.

Article courtesy of Inside Facebook

The Facebook Exchange is one of the newest ways for a business to market to potential customers. Done through a select group of third party advertising companies, the Facebook Exchange has been found to be one of the most cost-efficient ways to acquire new customers.

Wondering how you can use the Facebook Exchange? Learn more with the Facebook Marketing Bible: The Leading Resource for Marketing and Advertising on Facebook.

This month, we have included a new summary on the Facebook Exchange which provides a comprehensive overview of how it works as well as who provides access to it. We have also updated with information on Facebook Open Graph and Facebook Offers.

About the Facebook Marketing Bible

The Facebook Marketing Bible has enabled thousands of brands, app developers, content publishers and businesses of all sizes to do more with Facebook, from the basics of creating a successful fan page, to the complexities of social plugin integration on an off-Facebook website.

The Facebook Marketing Bible includes hundreds of pages of strategies, comprehensive how-to guides and case studies analyzing today’s most successful marketing and advertising campaigns on Facebook. Take a tour of the Facebook Marketing Bible.

Recent Additions to the Facebook Marketing Bible

• An Introduction to the Facebook Exchange
• Facebook Exchange Provider Comparisons
• An Introduction to Facebook Offers
• How to Create a Facebook Offer
• Putting Into Practice: Facebook Open Graph
• Facebook wants Open Graph language to ‘feel natural,’ represent actual behavior
• Uncovering Negative Feedback through Facebook Insights
• The best features of the Nike+ Timeline integration and how marketers should apply them to their own apps

Like the Facebook Marketing Bible on Facebook: TheFMB and follow us Twitter @FBMarketBible. Feel free to contact us with any questions or topic suggestions.

Article courtesy of Inside Facebook

Facebook users who see retargeting ads on the social network through the Facebook Exchange are clicking and converting throughout the day, says FBX partner Triggit. That’s an advantage over traditional real-time bidding exchanges, where conversions skew toward post-work hours.

Triggit says one e-tail client saw over 53 percent of click-through conversions on traditional display occur between 4-8 p.m. PST. Only about 22 percent occured between 7 a.m. and noon PST. With the Facebook Exchange, however, conversions were more evenly distributed throughout the day. Only about 41 percent of conversions on FBX occurred during those prime post-work conversion hours, 4-8 p.m., and about 32 percent occurred during working hours of 7 a.m. to noon. The differences are seen in the graphs below, though it’s important to note that the Facebook Exchange is still very new and trends are difficult to declare at this stage.

The relative frequency of conversions is clearly more evenly distributed in the second graph, which represents several hundred conversions on the Facebook Exchange. Triggit says this is reflective of users tendency to check Facebook at all hours, and shows that users are consuming and engaging with ads at about the same rate throughout the day.

“If anything, RTB on Facebook skews to the exact middle of the ‘work’ day, between 10 a.m. to 3 p.m. PST,” Triggit account manager Steve Palombo wrote in a blog post.

Triggit says about 60 percent of the advertiser’s conversions on FBX occurred during the typical 9-to-5 workday, compared to only about 40 percent across traditional display. Interestingly, FBX’s peak conversion time was during the lunch break of 12-1 p.m. PST. On traditional exchanges, the lunch hour produces a lower than average number of conversions.

TellApart, another company running ads on the Facebook Exchange, hasn’t seen the same patterns. TellApart CEO Josh McFarland says there is no significant difference in impression, click or conversion distribution throughout the day on Facebook versus other exchanges. He says bid volumes are distributed the same way throughout the day, but on major exchanges where competition is high, it takes a higher bid to win impressions. On Facebook, advertisers can win more impressions earlier in the day without necessarily raising their bids.

Triggit Marketing Director Christina Park says it wasn’t surprising that users on Facebook were coming up for bids all day and every day of the week “since everyone knows that Facebook is the most engaging site in the world.” What was less expected was that post-click conversions would come at faster rates on Facebook than traditional display. She noted that Facebook being a “brand-safe” site helps translate to a higher number of conversions. In an interview with AllThingsD, Triggit CEO Zach Coelius also suggested that traffic on other websites is often search-driven so users are looking for something specific, whereas Facebook is something that users always have open and are potentially seeing ads on.

Kenshoo Social provided the following data about clicks and conversions on Facebook, which also show relatively even distribution throughout the day, apart from sleeping hours. The data covers more than 8 million clicks and conversions for FBX and other Facebook ad types between Sept. 9 and Oct. 10.

We covered some earlier results from FBX partners here.

Article courtesy of Inside Facebook

First, let me extend my warmest congratulations to Mark Zuckerberg and his team at Facebook for reaching the 1 billion user mark. To build a network where one person in seven is a user is an amazing feat.

That notwithstanding, in an effort to prop up its faltering share price, is Facebook being forced to become more of an advertising network than a social network? Based on some recent advertising-related launches, it would seem so.

Specifically, I’m referring to Facebook Exchange (FBX) and Promoted Posts.

Facebook Exchange

It makes perfect sense for Facebook to leverage its massive advertising inventory to allow retargeting, a practice that’s been a staple in the online ad world for years. Some would even wonder what’s taken Facebook so long to get around to it. Still, the timing of its launch seems less than coincidental.

Promoted Posts

This, to me, is the best indicator that Facebook is reacting to the IPO debacle. Not only are Promoted Posts no longer free for businesses (I never thought it would remain free forever.), Facebook has started offering the feature to its members at $7.00 a pop. Now, that does seem a bit far-fetched and quite uncharacteristic, especially when you consider that Facebook touts it is “free and always will be.”

I know that the company has been testing Promoted Posts in some countries since May, so maybe I’m raising a unwarranted concern. But, what really concerns me is whether Facebook will show greater allegiance to its shareholders than to its 1 billion users. I mean, isn’t the mandate of every public company to satisfy shareholders? So, why should Facebook be any different?

Everyone knows that the vast majority of Facebook’s revenue comes from advertising, so what are we seeing? More advertising.

Not to be a doomsayer, but I wonder if this could be the beginning of Facebook’s downfall. Perhaps that, too, is a far-fetched notion, but it’s not without precedent. Even now, we’re beginning to see the rise of non-advertising oriented social networks, most notably App.net, which promotes itself as a “service that puts users first.” Certainly, others will follow its lead.

I’m certainly no prophet, only an observer, but I believe there is cause for concern and I’m not the first one to think so. Technology Review writer Michael Wolff said back in May that, “For all its valuation, the social network is just another ad-supported site. Without an earth-changing idea, it will collapse and take down the Web.” That’s an audacious statement if ever there was one!

If Facebook becomes, as SCT editor Paul Marsden asserted in a recent post, an “online ad company,” could it follow the same path as other previously predominant social networks? (Well, could it?)

Nothing lasts forever, not even Facebook.

Today’s article is sponsored by Payvment: The #1 Social Commerce Platform

Article courtesy of Social Commerce Today

We welcome a new sponsor to Social Commerce Today – Payvment, the world’s leading social commerce platform on Facebook. Payvment’s goal is simple: to connect people, products, and conversations in new ways to reinvent online shopping.

Facebook has received an enormous amount of criticism from its faltering IPO to what one person referred to as its “old fashioned” advertising practices. Lately, however, with the launch of its ad exchange program called FBX and the new online gifts store – which I also refer to as an “exchange” – Facebook has gotten a couple of things right:

1. Facebook Exchange (FBX)

Facebook has entered the retargeting game through its new Facebook Exchange, which allows brands to take advantage of the social network’s massive ad inventory. According to comScore’s US Digital Future in Focus report, with more than 1.3 trillion impressions – 27.9 percent market share – Facebook was the “leading U.S. publisher of display ads in 2011.”

Until the recent launch of FBX, Facebook had never maximized the value of that inventory in a manner consistent with what advertisers have been doing for a number of years – retargeting, which, according to Wikipedia, is defined as online targeted advertising by which ads are delivered to consumers based on previous Internet actions that did not in the past result in a conversion.

Speaking to the powerful impact FBX can have on advertising, Brian Lesser, CEO of digital media company Xaxis said, “It is difficult to overstate the impact that Facebook Exchange will have on the entire digital media landscape. With the launch of FBX, Facebook not only instantly multiplies the overall size of the RTB market, it provides high-quality inventory that is brand safe and extremely targeted.”

If what Lesser said is true, it’s certainly a win for Facebook. In fact, the website MarketingLand reported that ad network partners are “crowing about” the positive results they have experienced. So, score one for Facebook!

2. Facebook Gift Store

In August 2010, Facebook closed its virtual gift store only to open a “real gift” store (as in physical products) late last month.

SCT Editor Paul Marsden says this is a smart move for Facebook because it offers “social utility,” which he defines as “helping people solve problems socially or solve social problems.” (Social utility is a topic we cover extensively in our new book, The Social Commerce Handbook: 20 Secrets for Turning Social Media into Social Sales, published by McGraw-Hill.)

Altimeter Group analyst Rebecca Lieb stated that both F-commerce and mobile commerce will get a “powerful surge” if this new venture is successful, according to The Markets Are Open blog.

I think the new gifting service makes common sense. Facebook reminds users of friend’s birthdays, so why not offer a way to provide a more tangible acknowledgement of that auspicious occasion than simply extending well-wishes in the friend’s timeline.

With its gift store, Facebook takes literal ownership of the term “f-commerce,” and may even take a bite out of Amazon’s pocketbook to boot. Regardless, both FBX and the gift store should help turn the negative tide of criticism and put the social network on a path to even greater profitability.

This post is brought to you by Payvment, the #1 social commerce platform on Facebook. Payvment’s goal is simple: to connect people, products, and conversations in new ways to reinvent online shopping. For more information click here. 

Related articles

• F-commerce: Analysts say Facebook Gifts can be a Major Money Maker
• Has Facebook cracked f-commerce?
• Buyers Bullish on Facebook Exchange

Article courtesy of Social Commerce Today

Facebook Exchange could pull in a wealth of new advertising dollars by letting businesses retarget ads at Facebook users who’ve visited their websites. Now I’ve learned and confirmed that the first Exchange ads are running, and Facebook has nearly doubled the companies with access to the program. Plus one source close to Exchange tells me “initial results are good, they’re going very, very well.”

Announced 10 weeks ago, Exchange brings the first cookie-based retargeted ads to Facebook — a format common around the web but that Facebook must handle delicately because of privacy. The expansion and comments from Sheryl Sandberg show Facebook has high hopes that Exchange will bolster its bottom line.

Why Exchange Is Critical To Facebook

Here’s a quick primer on FBX. A Facebook user visits a third-party website, such as a travel site where they view prices for a hotel in Hawaii. That website drops a cookie on the user’s browser, and then hands a demand side platform (DSP) the complementary cookie. The DSP identifies the user to Facebook and tells it it wants to advertise to them the next time they visit Facebook.

The user visits Facebook, which pings the DSP asking for a real-time bid for how much they’d pay per impression to show that user a Facebook sidebar ad. If the bid is high enough, the ad gets shown, Facebook charges the DSP, and the DSP charges the website owner.

This is all so important for Facebook because it has classically been seen by advertisers as stronger for institutional brand advertising that improves awareness and perception than direct advertising whose click-throughs translate to sales.

Essentially Facebook is at the top of the funnel at demand generation, opposed to the bottom at demand fulfillment where measurement of return on investment is easier, ad rates can be higher, and Google Search rules. If Facebook wants to boost revenues and also make its ads more relevant, it needs to break into the bottom of the funnel, and retargeted Exchange ads can help.

And they are. Direct advertisers may flock to the DSPs because my source tells me Exchange results are “in-line with performance of retargeted ads [across the web] that have really high ROI. It’s going quite well.” However, there’s currently only a small volume of ads being run and I’ve heard many big travel advertisers are still getting their cookie-syncing set up to work with FBX.

New FBX Partners Signal What’s Next For Facebook Ads

On the social network’s first public earnings call a month ago, Sandberg said regarding Facebook Exchange, “We’re at a very early alpha stage test… but we’re really encouraged by how interested our advertisers and customers are.” And Sandberg’s not blowing steam. We hear AdRoll has assigned a huge chunk of its engineering resources towards working to perfect its integration with Facebook Exchange. Apparently it sees a pot of gold at the end of the rainbow if it can become the premier platform for advertisers to retarget Facebook users.

Some time between the announcement of Exchange and now, Facebook struck deals with six more DSPs to join the program. I’d learned of a few and Facebook agreed to give me the full list of Exchange partners. The newly added ones are in bold:

• AdRoll
• AppNexus
• Criteo
• DataXu
• MediaMath
• Nanigans
• Optimal
• RocketFuel
• Tellapart
• TheTradeDesk
• Triggit
• Turn
• Xaxis
• X+1

With the first wave, Facebook curiously sidestepped all its existing Ads API partners — the tools and services big businesses use to efficiently buy standard Facebook ad campaigns and Sponsored Stories. There are two possible reasons for this. First, retargeting and real-time bidding required for Exchange are specific technologies that many Ads API partners didn’t have built.

Second, and more interestingly, Facebook is not currently allowing Exchange partners to layer its standard biographical ad targeting parameters on top of retargeting. That means a DSP can’t say it only wants to target users who’ve received a cookie and are 25 to 45 year old males. This might be because Facebook refuses to give personally identifiable data on its users to advertisers. If it allowed the coupling of standard targeting and retargeting by admitting partners who do both, those ad platforms might be able to deduce characteristics of Facebook users and combine them with cookie-data to create stunningly accurate profiles of visitors to their site.

Facebook doesn’t want those DSPs to be able to turn around the Facebook bio data to improve their targeting of users outside of Facebook.com. But a different source says Facebook does want to let advertisers combine retargeting and bio data so they can serve more relevant ads on Facebook.com as long as it’s in a way that doesn’t jeopardize user privacy.

It may be setting itself up for once it’s figured out how to do that, as now Facebook has allowed Nanigans and Optim.al, two existing Ads API partners into the Exchange program. The presence of Nanigans and Optimal in the Exchange program may indicate that when Facebook is ready to combine targeting options, it wants experienced Ads API partners ready to test it. However, my sources say even if Facebook can’t securely merge the targeting options, there’s a very healthy business tapping into existing retargeted ad budgets.

So with FBX ads now running, Sandberg citing strong interest, and more partners signed on, the next step is for Facebook to prove retargeting can earn advertisers money. While the whispers I’m hearing indicate they work well, Facebook will need to compile conclusive studies demonstrating that Exchange ads sell products. Luckily, I recently came in to Facebook to talk to Sean Bruich, head of measurement and monetization analytics. He’s building up a team of specialists whose sole mission is showing advertisers that when they invest in Facebook, they get even more back.

Article courtesy of TechCrunch