Since its launch a few months back, the Facebook Exchange (aka FBX) has created lots of buzz amongst companies involved in Real Time Bidding (RTB). While much of the initial discussion about FBX was centered around low-funnel tactics such as site retargeting, more companies (including my company, Simpli.fi) are now complementing site retargeting with upper funnel tactics such as search retargeting on FBX.
I have written prior articles about the opportunity that search marketers have to leverage their expertise with keywords into success with real time bidding in general, and in particular with search retargeting.
The emergence of FBX only enhances this opportunity by improving both the reach and the performance of RTB campaigns. Here is how FBX is making an impact:
Greater Reach
The most direct and obvious advantage that FBX is bringing to the search retargeting and site retargeting campaigns of performance and brand marketers alike is extended reach and frequency.
According to the Wall Street Journal, 71% of all 221 million U.S. Internet users are on Facebook. And per comScore, Facebook accounts for 15% of all time spent online and 16% of all page views.
In search marketing, many advertisers’ campaigns are constrained by limited inventory on their most effective keywords, as users typically spend less than 5% of their time on search engines. The addition of FBX alone provides three times the amount of time available to target high-value users.
Combining the reach and scale of Facebook with the already massive reach and scale of Google, AppNexus, Pubmatic, Rubicon, OpenX, Lijit, Yahoo!, and the other RTB exchanges only further cements RTB as the go-to method for reaching effective audiences at scale. This is especially helpful for advertisers looking to advertise at scale to very specific audiences.
Improved Cost Per Action (CPA) Performance
While there are many metrics that online advertisers use to measure the effectiveness of their campaigns, CPA performance remains the standard for performance marketers as well as an increasing number of brand marketers.
E-commerce players typically define their “action” as making a sale, whereas other marketers define actions as anything from generating a lead, visiting a dealer/store locator page to watching a video, or any other activity that they want to influence.
Quality of Sites
The addition of FBX to the impressions available through RTB has a positive impact on several factors that improve CPA performance:
As noted in last month’s post, the quality of the sites where a campaign is displayed typically has a big impact on CPA performance. This is because on high-quality sites the ad is more likely to be seen; and because it is displayed in an environment that is supportive of the brand, it has a greater impact in driving the user to take the desired action.
Because the impressions available on Facebook are highly visible and are served in a trusted and brand-safe environment, adding FBX to a campaign is an excellent way to boost its CPA performance on most campaigns.
Recency
In both search retargeting and site retargeting, a key factor impacting performance is the time lag between when a user searches on a targeted term or visits the advertiser’s site, and when the user is shown an ad. We call this time lag the recency of the targeting on the campaign.
For campaigns that are promoting short-consideration items (including many shopping verticals, business travel, emergency repairs, and others) recency is especially important in driving performance. In longer-consideration verticals such as automotive, recency remains impactful but often less so. As an indication of the importance of recency, in December, Simpli.fi’s optimization algorithms drove 36% of all impressions served to within one hour of a user’s search event or site visitation.
The availability of FBX inventory, combined with the excellent user matching process employed by FBX, enables increased delivery of short-recency impressions that are highly effective in lowering CPA costs.
Look-A-Likes/Search-A-Likes
One of the most effective ways to improve the performance of a campaign while simultaneously increasing delivery is to leverage look-a-likes (or, when used with search data search-a-like) capabilities.
The concept of look-a-likes is simple: anonymously profile the behavioral patterns of users who are already converting on the advertiser’s site, and then target additional users whose behavior shows the same patterns. In search retargeting, this involves targeting users who are searching on the same or similar terms as existing customers. In behavioral targeting, this includes targeting users who have visited the same or similar sites.
In addition to depending on high volumes of user data and statistical pattern matching algorithms, the positive impact of look-a-like efforts depends on the availability of high-quality impressions upon which to target the look-a-like audience. The new influx of high-quality impressions that FBX makes available is a big boost for campaigns leveraging look-a-likes to improve performance.
Not only is FBX having a direct impact on improving the reach and performance of current campaigns, I expect that it will have even greater long-term effects on the online advertising industry. By making its high-quality inventory available to RTB, Facebook is demonstrating to other high-quality publishers that RTB can be a very effective way to monetize their inventory. If the success of FBX encourages publishers such as Twitter, LinkedIn and Amazon to take notice and accelerate their RTB plans that will indeed be a long and lasting impact on our industry.
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