Facebook Exchange emerges as a significant tool for advertisers

With programmatic buying of ads becoming more mainstream, Facebook Exchange has become an important addition in the advertisers' arsenal

e4m by Abhinna Shreshtha
Updated: Apr 14, 2014 7:53 AM
Facebook Exchange emerges as a significant tool for advertisers

Facebook launched the Facebook Exchange (FBX), the world’s first social media exchange for advertisers a few years back. With programmatic buying of ads becoming more and more mainstream, FBX seems to have become an important addition in the advertisers’ arsenal, say experts.

“Facebook Ad Exchange provides advertisers the ability to buy across multiple formats on Facebook via RTB (real-time bidding).  Combined with the ability to retarget and optimise to conversions, this enables us to utilise a strong advertising platform to reach out to a variety of audiences,” explains Tripti Lochan, CEO, VML Qais Asia.

In simple terms, think of real-time bidding as a stock exchange for ads. The RTB platform or exchange matches the brand’s ads with the  most relevant publisher. The brand (or rather its media agency) then bids for the publishers and ad spots they feel best suit their needs. The entire process takes less than a second. The concept of programmatic buying or RTB is still relatively new in India though more and more media agencies are launching their own ad exchanges and RTB platforms. For example, Starcom MediaVest is expected to launch its platform in May. MadHouse has also mentioned that it is launching its own ad exchange soon as is Razorfish. Mobile marketing solutions firm Vserv.mobi recently launched a mobile RTB platform. Then, of course, you have the biggies like Yahoo! and Google.

So, what exactly determines the efficiency of an ad exchange? The answer is one word is - data. The more data that is available for media agencies, in terms of audience behavior, browsing history, etc. the more effectively they can target them with the right ads and this is where Facebook has currently stolen the show from many other players.

As Varun Chawla, Associate VP, Paid Search Marketing, SMG Convonix,observes, an ad exchange is nothing but a provider that aggregates publisher impressions. In fact, with Starcom planning its own launch, we asked him how FBX fit into their plans. Chawla mentioned that they would use FBX as a connector to their proprietary RTB platform. This, once again, highlights the importance of Facebook’s data and reach to advertisers.

Preetham Venkky, Business Head of KRDS, a firm that specialises in creating Facebook strategies, explained,  “FBX is a demand side platform. Here, Facebook acts as the publisher. One fifth of the world’s page views are on Facebook. Also, retargeting on Facebook is generally much better than on other mediums.”  Brands usually work with certified Facebook partners, known as Preferred Marketing Developers, though it is also possible to work directly with Facebook. 

Another reason why media agencies and advertisers seem to prefer FBX is because it allows for efficient retargeting. What is retargeting? Suppose a person is on an e-commerce portal and is browsing through certain products. He leaves the website without making a purchase but, now, based on his browsing history, his interests are known. What retargeting allows is to place ads of the relevant products on this person’s Facebook (or any other publisher, for that matter) timeline. This retargeting feature is what attracts most advertises to FBX because, as Venkky puts it, “You cannot just miss out on the largest website, which accounts for 20 per cent of the total page views.”

Chawla also agrees that FBX’s real value is in terms of retargeting. When asked how an advertiser decides which network to use, he said, “Typically a campaign would have elements of all networks. Performance-based campaigns work best on Google networks, while Facebook provides more targeting options like geo-targeting.” Chawla also admitted that Yahoo’s exchange, which is based on Microsoft’s Bing network, has limited reach because of the small size of data set, though running campaigns on it is cheaper due to less competition.

With Facebook adopting a more advertiser-friendly position in recent times, the relevance of FBX seems set to keep on increasing in a more performance-oriented digital advertising space. Specifically, with the organic reach of a brand having radically decreased, and expected to continue reducing, it will be interesting to see how important a hypertargeting tool like FBX becomes for advertisers. Lochan admitted that FBX could start becoming more relevant. “Realistically, you’d use FBX for driving more effective traffic to websites rather than for page post/page engagement.  The organic reach issue should be dealt with by brands wishing to engage with their audience on Facebook more than via FBX.  A good combination of both these communication tools on Facebook can ensure good reach, engagement, activation and loyalty,” she further added.

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