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Facebook Exchange & the First Party Data Advantage

The Facebook Exchange (FBX) has been big news since it launched in September 2012. Advertisers all over the world want to understand more about how FBX differs from the standard Facebook ad products, what type of advertising is possible with FBX, and how it performs compared to other display advertising channels. As a FBX Preferred Marketing Developer, Sociomantic is helping advertisers to boost incremental sales with this new RTB channel.

The biggest difference between FBX and other Facebook advertising products is that FBX allows advertisers to use their own data from outside of the platform to reach users with personalized display ads on Facebook using a buying methodology called Real-time Bidding (RTB) to pay individual prices for each ad impression. Sociomantic’s advertisers have the opportunity to  use RTB retargeting with Dynamic Creative Optimization to reach users on FBX with display ads that are individually personalized based on users’ previous interactions with the advertiser website.

First Experiences with FBX

Facebook is just the latest player to join the ad exchange game. To date, we’ve worked with advertisers in more than 50 markets around the world to help them leverage real-time bidding, retargeting, dynamic creative, and other intelligent display solutions to reach interested users all over the web with personalized ads. Although FBX is still relatively young by comparison to some of the other ad exchanges, we’ve spent the past weeks digging into the results from some of our largest and most advanced FBX campaigns. Here’s a peek at what we’ve seen so far.

First of all, the reach available via Facebook is substantial – comScore reports that Facebook accounts for more than a quarter of all online display ads. In the U.S. as well as many European markets, the percent of internet users on Facebook exceeds 50 percent, according to eMarketer. (The worldwide penetration averages roughly 40 percent). When it comes to FBX in particular, the impression volume we’ve seen to date varies depending on the market and the advertiser, but in most cases the additional impression volume is expansive. For the time being, the impressions come at a lower cost – often as much as four times less than the CPM costs of other RTB inventory.

Although on average the click-through rates on FBX are lower than we usually see outside of FBX, lower inventory costs combined with the substantial impression volume means that advertisers can generate significant return on investment for FBX campaigns, with costs-per-action that are on average lower than in other RTB inventory. One of our largest advertisers in France was able to generate 30% more sales from only a 19% increase in additional RTB spend via FBX, showing that when properly executed, RTB retargeting on FBX can be a profitable channel for driving new sales. At Sociomantic, we’re committed to delivering all of our RTB media purchases to our advertisers with full pricing transparency, so they can clearly see the costs and margin for FBX media spend compared to their other RTB campaigns and adjust investments according to their attribution model.

In terms of unique audience, we have seen that although FBX has overlap with other RTB inventory sources, in some markets Facebook can provide as much as an additional 30% unique reach. (Likewise, there is still a substantial percentage of unique audience that can be reached via other exchange inventory, but not yet found on FBX.) This varies dramatically per market, based largely on Facebook’s internet user penetration (higher in Western European and North American markets, but growing everywhere) and the number of users who access Facebook via mobile (FBX doesn’t offer mobile impressions yet). Additionally, the level of engagement on the Facebook platform throughout the day tends to be more consistent than in the non-FBX channels, with users staying active on Facebook from morning to late-night.

One of the most interesting things we’ve found so far is that the users who do convert after clicking a FBX retargeting ad tend to make their purchase faster than they would from non-FBX retargeting – looking at five of our largest FBX campaigns in Europe and the Americas, the time-to-conversion after a click is on average 2.5 times faster than in non-FBX retargeting.

The summary of these results demonstrates that best practice is to run FBX campaigns as a complement to existing RTB retargeting campaigns, using FBX as a supplemental inventory source to reach additional audience with highly personalized ads that drive incremental clicks and sales.

Advanced RTB Retargeting on Facebook Exchange

The best results we’ve generated on FBX so far have been with advertisers who are using advanced strategies for their RTB retargeting campaigns. The methods vary widely depending on the advertiser’s unique shop, audience, vertical, and data capabilities, but here are few key examples from the retail industry.

For a major fashion retailer in Germany, we were able to generate a significant increase in spend efficiency of FBX spend by segmenting the website visitors into “new” versus “existing” customers, much the same as we did for shopping club BrandAlley on non-FBX inventory. (Read the BrandAlley case study). When a user visits the advertiser site, we can determine whether or not this is an existing customer, and create separate bidding and banner creation logics for each segment (defined by the advertiser). This allows the retailer to invest more for the highest-value segments, such new customers or existing customers who might not have purchased in a long time.

Likewise, loyalty campaigns can help increase engagement from users who have recently completed a purchase. There’s no reason that an advertiser should burn budget on showing ads with the same products a user has already purchased, especially at the risk of frustrating the customer and at the cost of displaying ineffective ads. A loyalty campaign offers the advertiser one avenue to responsibly engage with their users after purchase without retargeting them for already purchased products. This is just one way that we help advertisers to address the customer lifetime value, helping to increase transaction amount and frequency beyond the next sale.

The beauty of these RTB retargeting strategies is that they help to improve budget efficiency and drive customer lifetime value not only on FBX, but can be used in tandem with campaigns across all of our standard RTB inventory to reach interested users with highly personalized display advertising.

We’re very excited to apply our suite of performance display tools to the RTB reach now available on the world’s most popular website.

Want to learn more about advertising on the Facebook Exchange?
Get in touch with us today.