Post IPO, there has been lot of skepticism around Facebook’s business model, how it would raise $12.8 billion and with that the increasing criticism by pundits on the dropping price of the shares. Besides that Facebook has been questioned on how is it going to give marketers value for their money while the GM story opened the Pandora’s box. However yesterday, TechCrunch’s story that Facebook is soon going to launch Facebook Exchange puts a lid on all gossip.
Facebook Exchange is a real time bidding ad system where visitors to a third-party website are marked with a cookie and can then be shown real time bid ads related to their web browsing by Facebook. In other words, Facebook will show you targeted ads about a brand that you had recently visited on an external website. For example if you have recently visited an online ecommerce store that has tied up with Facebook for this program and you leave the store without buying the product that you had intended to, so the next time when you visit your Facebook you would see ads related to the store you visited with a discount on the product that you had intended to buy.
The model of Facebook Exchange looks good on paper but is it a great move when there has been skepticism about Facebook Ads? Preetham Venkky who is an ardent believer of Facebook’s growth, thinks that this is a fantastic move by Facebook. He further adds that since Facebook is already the leader in display ads in US, attacking users real time would provide a great opportunity to marketers.
To make it simpler, Preetham elaborated the working methodology via an example – suppose a person lands on the Cleartrip site and browses for air tickets from Chennai to Kathmandu but leaves the site without making a purchase. The cookie that captured his online behavior is shared with Facebook and the next time when he lands on Facebook, Cleartrip will show him ads listing flight tickets from Chennai to Kathmandu at 25% discount. The intention to purchase becomes higher because of the targeting done in a right way. Preetham summed up the move as “Facebook was being successful in creating awareness and top level consideration but it was lacking in driving purchase. With this move Facebook achieves all the three.”
Indeed for the first time, Facebook Exchange will give a smile to marketers as they will be able to target their potential customer. Sandeep Amar highlights that the huge base of Facebook makes it easy since the retargeting methodology being adopted by Facebook depends upon the very primary factor of how big is the user base. With a user base of 900 million Facebook is a clear choice to be the winner on this front.
Other factor that is going to work for Facebook is the way advertising works on Facebook, says Preetham. Facebook ads work in a non-intrusive way unlike the Google ads that find out new ways of putting ads and kill the experience. Real brands would prefer to be non-intrusive and will appreciate the real time DSP.
Undoubtedly, Facebook Exchange has given a reason to the marketers to cheer for but another point that is being debated is the size of the Facebook ads. Generally the ads that are run on other DSP’s are huge banners but Facebook has said that ads would be appearing on the right hand side panel. Will that deter this move? Sandeep believes that although Facebook Exchange will help to generate continuous revenue, smaller businesses would get affected by the ad size. However, he was quick to express that this is good from a customer usability point of view.
Besides this, Preetham expressed his happiness that Facebook has not walked the Google’s way when I asked whether Facebook is following the footsteps of Google. He shared that by skipping the publishers, who are so intrusive, Facebook has positioned it well.
As expressed earlier, Facebook Exchange will be a marketers delight but at the same time Facebook shouldn’t compromise upon user experience. In the present scenario, a user cannot opt out from being targeted and that clearly shows that Facebook has turned into aggressive advertising mode. This could be dangerous going further. But for now Facebook has been able to maintain the happiness triangle between the users, brands and itself.
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