Facebook is playing the long game with ad tech and the price is dominance of the mobile piece of the digital advertising jigsaw. In the recent Q3 earnings calls, COO Sheryl Sandberg clearly stated the reason behind the relaunch of Atlas and investments in ad tech; “Consumers are shifting quickly to mobile and the advertising industry is not keeping up,” she said.
For years, Google has monopolized the digital advertising space. Through its ad-serving platform DoubleClick and the Google Display Network (GDN), Google takes away the lion’s share of digital marketing dollars. According to eMarketeer, in July 2014, Google accounted for 31.45 per cent of the total digital advertising spend globally, while Facebook was a distant second with just around 7 per cent.
The numbers on the mobile front are quite different. eMarketeer says that in 2014, Facebook’s share in the net mobile ad revenue globally stood at 21.7 per cent. Though this is still less than Google’s 46.8 per cent share, the numbers need to be taken in context. Google’s share in the mobile ad revenue dollars has been steadily decreasing over the last few years (from 52.6 per cent in 2012 to 46.8 per cent in 2014).
On the other hand, despite early criticism about a lack of focus on mobile, Facebook has shown remarkable progress in mobile over the last couple of years since its IPO. In Q3’2014, revenue from mobile constituted 66 per cent of the company’s total revenue as compared to almost zero in 2011.
“It’s clear that marketers and publishers need better tools for the mobile world. This is an industry problem that we believe we are well-placed to solve,” said Sandberg. This could be taken as a veiled hint at Google, among others, which heavily depend/depended on cookie-based tracking; a system that digital marketers say gives just around 40 per cent cross platform accuracy.
In this scenario enters Facebook Atlas; a platform originally bought from Microsoft and now revamped to work on what Facebook terms, “People-based Marketing”. The Atlas proposition is that it uses user data instead of cookies to closely follow and target people as they move between applications and devices. The cherry on the cake is, of course, the tonnes of social data available with Facebook. Combining this demographic data with the allegedly improved targeting across devices makes for a potent combination, which has led to many seeing this as the most significant threat to Google and cookie-based marketing. Though this might be true to an extent, it is not a completely accurate picture.
Do cookies really not work on mobile?
Many digital agencies and experts say cookies don’t work on mobile, which has led to a bit of confusion about the actual nature of the problem. It is not that cookies don’t work; they are just not that accurate (just over 40 per cent accuracy said a few digital experts we spoke with). The reason for this, to quote an IAB report, is that “cookie functionality that vary by device and environment as well as the fragmentation of user’s activity between native applications (“apps”) and mobile web.” Simply put, individual applications on the phone are not able to share cookie information with either each other or the mobile browser. Then there is Apple, which does not allow third party cookies at all.
The bigger issue, opines Preetham Venkky, Head (Digital Strategy & Business) at KRDS Asia, is that cookies do not do user profiling; their targeting is based on user behaviour. Hence comes the need for more accurate tracking options.
Is Facebook Atlas the best alternative for the cookie problem?
The answer to this is not easy since Atlas has not been widely introduced yet and still available with only a few Omnicom clients. However, this is not the first time an alternative to cookie-based tracking has been attempted. For example, Apple and Google have created what is known as Advertising ID; a unique identity set generated by the OS and designed to give advertisers more accurate information of the user. These are now obligatory for all apps and new updates on both marketplaces. When taken this into consideration, Atlas’ “cookie alternative” pitch loses some of its shine.
Where Atlas might get the edge over Google and others in the long run is by providing a more intuitive targeting methodology, which is accurate across platforms and devices. Taken in this context, Google’s Eric Schmidt’s admission that his biggest mistake while at Google was failing to anticipate the rise of the social networking phenomenon might seem prophetic.
How significant is Facebook Atlas for advertisers?
Facebook has emerged as one of the most important media for advertisers online due to its scale and the breadth of information it has on users. With Atlas, this can be further leveraged beyond the Facebook “walled garden”. “Because of Atlas, the inventory available to me is now significantly higher. Also, because of Custom Audiences, I do not need to separate audiences. The advantage Facebook has is in its partner network, which will lead to lesser wastage of inventory,” says Gautamm Mehra, Social Media Head at iProspect Communicate2.
An example, according to Venkky, is when a company like Uber wants to advertise. The traditional search and cookie-based tracking will not be able to help since not a lot of people will search using the relevant keywords. On the other hand, a profiling based system, which looks at a person’s habits and activities will be able to create a much better match. However, cautions Mehra, ad rates might shoot up if everyone making an exodus to Atlas, swayed by the promise of better ad performance.
The ideal scenario now, said digital agencies we spoke with, is to take some time understanding the platform and then decide how to fit both GDN and Facebook Atlas in the media strategy. As Venkky puts it, “Not all advertising is done through technology. Google has had a seven year headstart in creating great relations with publishers. They have invested in it and worked on it for years. Facebook has been a slow in this area and will now need to catch up.” Google has already tapped the long tail, how quickly Facebook is able to do that remains to be seen.