Facebook Launches New Ad Retargeting Tool Following Impressive Beta Results

by Pamela Vaughan

Date

September 14, 2012 at 2:00 PM

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Just about three months ago, we learned about and reported on Facebook's tests of a new ad targeting tool called Facebook Exchange. And as of yesterday, Facebook announced that Facebook Exchange is officially out of beta. Missed our June article? No worries -- let's recap just what Facebook Exchange is, examine the results reported by some of the 8 demand-side platforms (DSPs) that participated in the beta program, and chat about whether you should experiment with it in your own Facebook advertising efforts. Sound good?

Facebook Exchange: A Recap

Facebook Exchange (FBX) is a cookie-based ad targeting system that serves up ads related to a user's web browsing activity, in real time on Facebook. The system utilizes demand-side platforms (DSPs) -- systems that allow advertisers to manage multiple ad/data exchange accounts via one interface -- to enable advertisers to reach their Facebook audience with more timely and relevant messages through real-time bidding. Facebook Exchange allows marketers to leverage consumer insight data to remarket to the same audience on Facebook at the right time. The Facebook ads that advertisers and marketers can use Facebook Exchange with are the traditional Facebook sidebar display ads, charged at cost-per-thousand-impressions -- not Sponsored Stories or mobile ads.

Here's a real-life application of how Facebook Exchange works, using the hypothetical example of an online invitation vendor called Invitablez:

  • Facebook user Patricia is planning her son Everett's 3rd birthday, who is currently quite infatuated with rocket ships. So she browses the Invitablez website, looking for the perfect space/rocket ship-themed invitations for her son's upcoming birthday party. Unbeknownst to Patricia, Invitablez has hired one of the DSPs that works with Facebook Exchange. (Facebook indicates it works with are over a dozen DSPs.)
  • A cookie gets dropped on Patricia's computer, typically when Patricia has shown "purchase intent."
  • Patricia sees a few rocket ship-themed invitation designs she likes, but she decides to hold off on purchasing for now, leaving the site. 
  • Meanwhile, Invitablez has already pre-loaded ad creative in order to target users like Patricia.
  • The DSP hooks up with Facebook to notify them of Patricia's anonymous user ID so Ivitablez can target her with Facebook ads.
  • Patricia visits Facebook, which recognizes the cookie on her computer, and the DSP gets notified that Patricia is on Facebook.
  • The DSP has the opportunity to make a real-time bid to display Invitablez's ads to Patricia.
  • DSPs that make the highest bids get their very targeted ads displayed to Patricia.

Pretty neat, huh?

Results Reported by DSPs in the Beta Launch

facebook exchange examples doneOkay -- so this is a pretty cool new option for Facebook advertisers. But does it work?

Yesterday, AllFacebook and TechCrunch shared some results from several DSPs that were involved in the Facebook Exchange beta program. As a whole, the data seems to indicate that FBX ads may be less expensive and generate higher clickthrough rates. Furthermore, they seem to generate higher post-click conversion rates compare to retargeted ads on other exchanges -- even Google’s AdX.

Here are some noteworthy results from several of the DSPs that released specific data:

  • AdRoll reported an ROI of 16X for its clients using FBX ads.
  • TellApart's clients generated an average user clickthrough rate of 6.65% with FBX ads vs. 6.41% on Google's AdX. 
  • Triggit indicated that its clients' FBX ads' post-click conversion rates were 2.2X higher, their cost-per-click was 5.6X lower, and they generated 4X more profit than ads via traditional ad exchanges.

And of the other DSPs that didn't release specific data but were involved in the beta, their feedback about the effectiveness of FBX ads were also very favorable.

Thinking About Using FBX?

It's easy to understand why these ads would be -- and appear to be -- more effective than Facebook's standard display advertisements. As a marketer, being able to serve ads with much more relevant and personalized advertising is definitely a win, and the "real-time" aspect of FBX is also appealing, to be sure. Think about it: if you were running a specific, time-sensitive campaign, you'd be much better able to use your Facebook advertising spend to direct specific users to those specific campaigns. Furthermore, retargeting users while an idea is still fresh in their minds is a great way to keep your brand and products top-of-mind for potential buyers as they browse the web.

Consider Patricia from our earlier example. Maybe after she leaves the Invitablez website, she decides to mosey on over to Facebook to upload some pictures of her son, Everett. And what appears on her Facebook sidebar, but a limited-time only 30% off coupon for invitations from Invitablez -- with free shipping! "Maybe I'll reconsider those rocket ship invitations," she thinks ...

Facebook Exchange ads may sound pretty appealing, but FBX Product Marketing Manager Scott Shapiro says they aren't for everyone:

"Facebook Exchange is perfect when the objective is a conversion outside Facebook and the data used to drive that objective exists outside Facebook. When brand goals like increasing awareness and favorability are the objective, Facebook’s native tools are usually a better fit because they work with all our social formats and placements in addition to fan targeting."

In other words, if your goal is to drive awareness of and increase distribution throughout Facebook for the content you share on your business page, the best way to use Facebook ads to increase that distribution is with Sponsored Stories and Page Post Ads, not with FBX ads. The lesson here is, make sure you align your objectives for using Facebook ads with the right Facebook ad option for the job.

How to Get Started With FBX

If you want to learn more about using Facebook Exchange, you can check out the FBX Guide here. And to get started, Facebook advises you to contact your preferred DSP or Agency Trading Desk to get started. Just visit https://apps.facebook.com/pmddirectory/, select 'More Options,' and click 'Facebook Exchange through Real-time bidding.'

Now that it's out of beta, will you start experimenting with Facebook Exchange ads?

Image Credit: Facebook Studio and TellApart

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