http://www.wired.com/business/2012/11/facebook-exchange-2/
Wall Street wants Facebook to find a new source of aggressive growth,
and the social network appears to have done just that — with ads that
follow you from site to site and remember you for lengthy periods of
time.
Facebook publicly launched its Facebook Exchange ad-bidding network less than three months ago and has been testing it only since June. But the system is already shaking up the ad business, say partners who have been on the exchange since the beginning, delivering a huge volume of users with a strong propensity to click on ads and helping advertisers follow those users for longer periods of time than is possible under competing systems. In the process Facebook is giving Google, long the undisputed leader in the so-called “retargeting business,” a run for its money.
“It’s huge,” says Zach Coelius, whose ad-bidding company Triggit today announced it raised a $7.4 million series B round led by Spark Capital and Foundry Group at what Coelius describes as a “significant step up” in the company’s valuation. “We literally have been growing exponentially since FBX launched. We’ve grown more than 300 percent both in the size of the community and the revenue the company is doing.”
The success of Facebook Exchange appears to already be helping to lift Facebook stock, even though the social network has been careful not to publicly discuss the exchange’s performance. Facebook shares rose 8 percent after upgrades from BTIG Research and from Carlos Kirjner, the Sanford Bernstein analyst who distinguished himself by setting an early, accurately bearish price target on Facebook. “The early success of Facebook’s mobile monetization efforts and of the Facebook Exchange has changed our view,” Kirjner wrote, raising his price target on Facebook shares to $33 from $23. (The stock is trading at $26 today.)
But it’s growing fast, partners say. And Wall Street isn’t the only sector keenly interested in that growth. Advertising retargeters, who follow web surfers as they travel away from shopping and other sites, say Facebook Exchange is breathing new life into the business of putting ads in front of the users the retargeters stalk. It’s also opening a new range of possibilities, letting the retargeters point their ads at users over a longer period of time and in a new context where they are more likely to notice the ad.
“Nine months ago, it seemed patently clear to me as a longtime participant in this industry that [Google’s] DoubleClick was just running away with the opportunities; they were just leaps and bounds ahead of everyone else,” says Josh McFarland, CEO of ad targeting company TellApart. “There was no other game in town, and then suddenly Facebook came on the scene and then literally in about three months became an exchange that is almost as powerful and almost as highly performing as the oldest, best ad exchange out there, which is DoubleClick.”
TellApart’s business is to help e-tailers like Drugstore.com and Diapers.com bid in real time to reach former and would-be customers on other sites. Six months ago, Facebook received none of that business; now it’s getting 20 percent.
McFarland, who spent five years at Google managing various ad platforms, thinks that’s partly because Facebook has an edge in its ability to identify users over time, thanks to the cookies set by Facebook.com. Because users visit Facebook directly and frequently, McFarland says, its cookies are treated more benevolently in many browsers than those set by doubleclick.net, the domain Google’s ad exchange uses and one that no ordinary person would want to visit directly.
“As soon as you’re one week away from the last time we saw that person on a retailer’s site, Facebook is finding more of those people than DoubleClick; it’s really interesting and I think it has lasting effects for the industry,” McFarland says. “Over time, Facebook actually does a better job of maintaining consistency with those users.”
Facebook could not be reached for comment on its cookies.
Ad retargeters also like Facebook Exchange because users are more engaged with the ads served there. Retargeted ads in general are already more relevant and clicked on by users, since they “know” about some of your previous web surfing. This relevance helps take the edge off a retargeted ad’s inherent creepiness. On Facebook, retargeters say, clickthrough rates are further amplified, because the site is relatively conservative in the number of ads it shows and because users there tend to be more open to being distracted.
“On Facebook your ad is always above the fold,” says Adam Berke, president of the retargeting platform AdRoll. “There aren’t accidental clicks and things like that; users are used to where the ads are. We’ve been impressed by the quality of the audience. If someone clicks, they are likely to complete the action that you were hoping for.”
Berke said the exchange has been “huge for us,” opening up a “massive” new audience.
Despite the promising growth spurt, there are worries about how sustainable the growth of Facebook Exchange will be. Bernstein’s Kirjner, for example, says the exchange is handicapped by shrinking use of Facebook on the desktop in the U.S. On mobile devices, it’s harder to follow and retarget users as they routinely switch from browser to apps and back again, and from one device to another. Kirjner also raised regulatory concerns about Facebook Exchange; Google was slapped with a $22.5 million fine over its ad exchange practices.
No one is accusing Facebook of the sort of shenanigans that got Google in trouble in that case. And debates over mobile use patterns in America don’t change the fact that Facebook Exchange is seeing more and more business from overseas. Coelius plans to use his new capital to open offices in Asia and Europe. “Literally every day we’re signing new customers overseas,” he says. Whether it’s by luring international advertisers, helping e-tailers follow their users onto Facebook, or connecting users, it seems Facebook is always intent on making the world a smaller place.
This story has been updated from the original, which mis-stated the title of Adam Berke. 4:35 pm ET
Facebook Is Quietly Making a Killing With Ads That Pursue You
- 11.29.12 hehe --u just keep giving them your info for free ;)
Triggit CEO Zach Coelius. Photo: Joi Ito/Flickr
Facebook publicly launched its Facebook Exchange ad-bidding network less than three months ago and has been testing it only since June. But the system is already shaking up the ad business, say partners who have been on the exchange since the beginning, delivering a huge volume of users with a strong propensity to click on ads and helping advertisers follow those users for longer periods of time than is possible under competing systems. In the process Facebook is giving Google, long the undisputed leader in the so-called “retargeting business,” a run for its money.
“It’s huge,” says Zach Coelius, whose ad-bidding company Triggit today announced it raised a $7.4 million series B round led by Spark Capital and Foundry Group at what Coelius describes as a “significant step up” in the company’s valuation. “We literally have been growing exponentially since FBX launched. We’ve grown more than 300 percent both in the size of the community and the revenue the company is doing.”
The success of Facebook Exchange appears to already be helping to lift Facebook stock, even though the social network has been careful not to publicly discuss the exchange’s performance. Facebook shares rose 8 percent after upgrades from BTIG Research and from Carlos Kirjner, the Sanford Bernstein analyst who distinguished himself by setting an early, accurately bearish price target on Facebook. “The early success of Facebook’s mobile monetization efforts and of the Facebook Exchange has changed our view,” Kirjner wrote, raising his price target on Facebook shares to $33 from $23. (The stock is trading at $26 today.)
‘Facebook is finding more people one week from the retail visit than DoubleClick; it has lasting effects for the industry.’
As recently as last month, Wall Street was still trying to make heads
or tails of Facebook Exchange. In an Oct. 23 quarterly earnings call
with the company, a JP Morgan analyst asked about early results from the
exchange, and whether they might help offset declines in desktop U.S.
Facebook usage. COO Sheryl Sandberg answered only that it was “really
early” and that the exchange was still a small portion of revenue.
—Josh McFarland
CEO, TellApart
CEO, TellApart
But it’s growing fast, partners say. And Wall Street isn’t the only sector keenly interested in that growth. Advertising retargeters, who follow web surfers as they travel away from shopping and other sites, say Facebook Exchange is breathing new life into the business of putting ads in front of the users the retargeters stalk. It’s also opening a new range of possibilities, letting the retargeters point their ads at users over a longer period of time and in a new context where they are more likely to notice the ad.
“Nine months ago, it seemed patently clear to me as a longtime participant in this industry that [Google’s] DoubleClick was just running away with the opportunities; they were just leaps and bounds ahead of everyone else,” says Josh McFarland, CEO of ad targeting company TellApart. “There was no other game in town, and then suddenly Facebook came on the scene and then literally in about three months became an exchange that is almost as powerful and almost as highly performing as the oldest, best ad exchange out there, which is DoubleClick.”
TellApart’s business is to help e-tailers like Drugstore.com and Diapers.com bid in real time to reach former and would-be customers on other sites. Six months ago, Facebook received none of that business; now it’s getting 20 percent.
McFarland, who spent five years at Google managing various ad platforms, thinks that’s partly because Facebook has an edge in its ability to identify users over time, thanks to the cookies set by Facebook.com. Because users visit Facebook directly and frequently, McFarland says, its cookies are treated more benevolently in many browsers than those set by doubleclick.net, the domain Google’s ad exchange uses and one that no ordinary person would want to visit directly.
“As soon as you’re one week away from the last time we saw that person on a retailer’s site, Facebook is finding more of those people than DoubleClick; it’s really interesting and I think it has lasting effects for the industry,” McFarland says. “Over time, Facebook actually does a better job of maintaining consistency with those users.”
Facebook could not be reached for comment on its cookies.
Ad retargeters also like Facebook Exchange because users are more engaged with the ads served there. Retargeted ads in general are already more relevant and clicked on by users, since they “know” about some of your previous web surfing. This relevance helps take the edge off a retargeted ad’s inherent creepiness. On Facebook, retargeters say, clickthrough rates are further amplified, because the site is relatively conservative in the number of ads it shows and because users there tend to be more open to being distracted.
“On Facebook your ad is always above the fold,” says Adam Berke, president of the retargeting platform AdRoll. “There aren’t accidental clicks and things like that; users are used to where the ads are. We’ve been impressed by the quality of the audience. If someone clicks, they are likely to complete the action that you were hoping for.”
Berke said the exchange has been “huge for us,” opening up a “massive” new audience.
Despite the promising growth spurt, there are worries about how sustainable the growth of Facebook Exchange will be. Bernstein’s Kirjner, for example, says the exchange is handicapped by shrinking use of Facebook on the desktop in the U.S. On mobile devices, it’s harder to follow and retarget users as they routinely switch from browser to apps and back again, and from one device to another. Kirjner also raised regulatory concerns about Facebook Exchange; Google was slapped with a $22.5 million fine over its ad exchange practices.
No one is accusing Facebook of the sort of shenanigans that got Google in trouble in that case. And debates over mobile use patterns in America don’t change the fact that Facebook Exchange is seeing more and more business from overseas. Coelius plans to use his new capital to open offices in Asia and Europe. “Literally every day we’re signing new customers overseas,” he says. Whether it’s by luring international advertisers, helping e-tailers follow their users onto Facebook, or connecting users, it seems Facebook is always intent on making the world a smaller place.
This story has been updated from the original, which mis-stated the title of Adam Berke. 4:35 pm ET
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