Now that the Instagram acquisition is stable and the new timeline layout excitement has faded, Facebook has embarked on its new quest, and it comes in the form of an ad bidding system. Facebook has always made an effort to help advertisers take part in the Facebook phenomenon, and this new real-time bidding is expected to help give advertisers even more control when it comes to advertisements on the site.
The new system is called the Facebook Exchange, and although still in the beta stage, it is said to launch in the next few weeks. It is no secret that Facebook has been struggling in terms of revenue, so this new announcement is no surprise. A big reason that Facebook stock could be declining is because their ad revenue growth simply isn’t performing, so the new Facebook Exchange will be here in the next few weeks to hopeful change this trend.
How Facebook Exchange Will Work
The new bidding system will utilize cookies in Web browsers to track users after they visit Facebook—a tactic commonly known as retargeting. Understanding a user’s browsing history will help Facebook and advertisers place relevant ads on a Facebook page. The idea behind retargeting is that it works great for advertisers because their ad will get put in front of an audience that is really interested in a certain topic and it is great for users because they will see ads targeted to their specific needs at that specific time.
For example, if someone were to visit a website about traveling to Australia, an Australian hotel may want to advertise to that person. Facebook Exchange will make this possible. The ads will still show up in the right sidebar, so the look and layout of the site will not change.
Currently Facebook advertisers target users based upon interests that the users share on their individual profiles. For example, if someone were to “like” Pepsi, then Pepsi may opt to advertise to that person over someone who hasn’t made it known that he/she likes Pepsi. While this type of targeted advertising will still exist, it will not be a part of the real-time bidding.
The Cost of Facebook Exchange
According to Bloomberg, real-time bidding will account for 27 percent of the projected $18.9 billion to be spent on U.S. online display ads in 2015. So how much will the Facebook Exchange cost? The pricing will be based on the cost per thousand impressions (CPM) as well as where the ad is placed.
Although users of Facebook will not need to worry about paying any money (obviously), those who are against retargeting will likely not be happy about this new announcement. Fortunately, Facebook has made it clear that users can choose to disable cookies by third-party partners by heading to the privacy settings of the site; however there is not going to be a way for users to block the tracking on Facebook’s site.
What This Means for Marketers
The new Facebook Exchange will be important for small businesses to understand and participate in over the next few years for several reasons.
First, retargeting is already available to Google advertisers and it has proven to be very successful in the past, so a large majority of small businesses (your competition) are likely to adopt this Facebook Exchange because they believe in the strategy.
Second, this new real-time bidding project is great for businesses that cater toward a younger demographic. This new project has opened up the doors for those who have been waiting to follow their audience on a platform where their audience is very active.
Finally, this means that marketers will need to focus on creating a solid Facebook brand page. Advertising on Facebook means that a company will have a higher chance that someone will search for the company on Facebook. Many companies also use their Facebook ads to help grow the number of “likes” on a business page. The opportunities to really get people to your company Facebook page are endless with the new Facebook Exchange, so now is the perfect opportunity to really spruce up your company’s profile.