Facebook Is Putting The Focus Back On Direct Response And FBX-Powered Ads

Facebook has focused a lot of its paid ad products on branding - ads that tout a business and build positive feelings about the brand. Search, meanwhile, has always been the primary digital format for direct response ads - ads designed to get customers to take an immediate action based on what they've already shown interest in.

But now Facebook is going after the search space pretty aggressively, with a new presentation for ad partners emphasizing Facebook's strong role as a direct response ad format.

That means Facebook Exchange (FBX) is about to get a lot more attention. It's Facebook's proprietary real-time bidding exchange and it marries Facebook user data with data from third-party platforms that track user web browsing behavior. FBX then uses these two parameters to serve hypertargeted ads in the desktop News Feed and right-rail.

Recently, BI Intelligence took an in-depth look at FBX to understand how the Exchange works, which players are partners, and how the ads it serves perform. We also put FBX in context in terms of its size and performance.

Subscribe to BI Intelligence today to gain access to the FBX report, and all our ongoing coverage of the social media and digital ad industries, including downloadable Excel files.

The real-time aspect of FBX is crucial. It's impossible to target a user who is interested in living room furniture with personalized ads when they open their Facebook page unless he or she can be identified and served a relevant ad in milliseconds.

Here are some of the key details from our report on FBX:

• FBX is becoming a huge player in the real-time bidding space: Millions of ads are sold and purchased on FBX every second with the help of demand-side platforms that plug advertisers into FBX, and billions of impressions are served every day. Facebook already accounts for about half of the retargeted ad clicks on the Web.
• The real-time aspect of FBX is crucial. It's impossible to target a user who is interested in living room furniture with personalized ads when they open their Facebook page unless he or she can be identified and served a relevant ad in milliseconds.
• FBX fills a certain niche, a very specific marketing objective known as "demand fulfillment," nudging shoppers to complete a purchase they've already shown interest in.
• The platform was fast out of the gate: FBX produced stellar early results for advertisers, both in terms of cost and performance. Eventually, the price and performance bar will be set higher. That's already starting to happen for better-performing News Feed placements.
• Despite FBX's huge weight in the retargeting space, it still constitutes a small share of overall Facebook revenues. FBX is not yet available on mobile, though this may be coming soon. Additionally, Sponsored Story social-native ads, which are at the heart of Facebook's ad ecosystem, aren't accessible via FBX. As Facebook makes direct response more of a priority, however, this could begin to change.

In full, the report:

• Details how FBX works, including which DSPs are involved, and how the DSP works with Facebook to serve ads
• Outlines which ad inventory is available on FBX and which is not
• Sizes FBX in terms of the total retargeting market, and its relative weight in Facebook's paid media ecosystem
• Explains which advertisers are best suited to FBX campaigns
• Provides three case studies from DSP partners on FBX performance so far