Facebook pursues real-time ad growth

17 September 2012

NEW YORK: Facebook, the social network, has rolled out a new real-time advertising platform in a bid to drive up revenues, aided by initial trials suggesting it delivers strong results.

The new system, Facebook Ad Exchange or FBX, uses real-time bidding technology, allowing brands to compete in automated auctions for the right to show their display ads to individual users. Bids are determined by brands analysing tracking data for each user's web browsing history.

"Real-time marketing is getting to be a really important component of digital advertising," Rebecca Lieb, an analyst at the Altimeter Group, the consultancy, told the Financial Times."We'll see a lot of event-triggered marketing in the upcoming election cycle."

AdRoll, one of several retargeting companies to conduct early tests of FBX, saw 60 of its clients, generate an average return of investment of $16 for every $1 spent.

Triggit also found clickthrough levels per dollar spent were 4.4 times higher than for normal ad exchanges, while the cost-per-click of each order secured was 6.5 times lower. Shutterfly, an online stationery firm, was one participant in Triggit's trial.

Similarly, post-click conversion rates – or the number of purchases made – were 2.2 times higher, and completed transactions were twice as likely to occur in the first two days after seeing an ad.

TellApart stated that its clients which tried FBX posted a payback between ten and 20 times stronger than is typically the case. For example, eBags, an ecommerce site, yielded a lift 15 times greater than the average.

Onlineshoes.com, the footwear vendor, also logged a clickthrough rate of over 15%, versus a norm of 6.6% for TellApart's clients. TellApart itself paid for ads on FBX, and revealed its unique reach rose by 30%.

Elsewhere, AppNexus reported that Accordant Media, the media buying group, saw cost-per-action rates fall by 25%. It also showed that Bizo, the business-to-business marketing firm, increased its reach by 30%, while securing cost-per-leads upto "300% better".

However, Rob Leathern, CEO of Optimal, a preferred marketing developer for Facebook, warned FBX had limitations. "There's no social element," he said. "If someone only does FBX retargeting ads, they're missing a large part of the story."

IDC, the insights provider, has predicted online display adspend will hit $12.6bn in 2012, with ads based on real-time bidding taking a 16% share. These totals should reach $18.9bn and 27% in 2015.

Brian Wieser, an analyst at the Pivotal Research Group, argued that Facebook's real-time platform could take $1bn in revenues next year, equivalent to roughly 20% of the RTB market.

Data sourced from Financial Times, Business Week; additional content by Warc staff