Facebook Exchange “Real-Time Bidding” Advertising
Facebook has recently introduced a new marketplace for advertisements through third-party tech partners. This marketplace allows businesses to target specific users based on their browsing histories, rather than just their personal Likes and interests. This type of advertising is very similar to Google ads, and helps businesses reach users who use Facebook as their homepage instead of Google.
Why the New Marketplace?
The effectiveness of Facebook advertising has been a very divisive subject in business circles over the past year. Studies have shown that the ad campaigns of some products, like Starbucks Coffee, have been successful. However, other studies have found that many ad campaigns on Facebook fall flat. In a widely publicized recent move, General Motors pulled all their ads from Facebook due to the conclusion of an internal study that Facebook ads were not garnering click-throughs. Facebook has claimed that measurements of click-throughs don’t fully represent the impact of Facebook ads because even viewing an ad, without clicking on it, has been shown to affect consumer preference. Still, many companies are understandably anxious about advertising campaigns that cannot be tangibly measured.
Facebook is hoping to ease the concerns future advertising clients by giving them the option to provide more direct, real-time, targeting advertising. Facebook believes that, like Google ads, these targeted, dynamic, real-time ads will attract more click-throughs than the standard, more general Facebook ad campaigns.
How it Works – The Basics
Your company will arrange with a third-party demand-side platform (DSP) to target Facebook users who visit the sites you own.
When a user visits your site and shows purchase intent but doesn’t complete the purchase, their browser is tagged with a cookie. If that user also has a cookie showing that they use Facebook, your DSP will contact Facebook to try to put ads up on that user’s page.
Your DSP will bid against others to place ads on that user’s Facebook page.
Your DSP will bill you a flat rate in cost per thousand successful views on Facebook.
This is the basic structure of Facebook Exchange; however, there are also a lot of additional ways to identify and advertise to potential customers. Depending on which third party provider you choose, these may include:
Additional information from DSPs. Most DSPs currently hold vast reserves of customer information gathered from cookies. This will allow them to target a broader base of potential customers.
Additional information from data partners. Your DSP may identify websites similar to yours and work out a data exchange. That way, an entire network of websites may be placing cookies on the browsers of potential customers.
One source of data that is not available to DSPs is, unfortunately, actual Facebook data like Likes, Interests, etc. Facebook has created a wall between their own data and the data of DSPs. If you want to target potential customers with Facebook ads using both the cookies collected by your DSP and the data on Facebook, you will have to run the same ad campaign concurrently through a DSP on Facebook Exchange and through Facebook itself.
So, Should I Advertise on Facebook Exchange?
If you are thinking about advertising of Facebook, most experts would recommend you go through a DSP and Facebook Exchange. The reason is simple: the success of Google. Google ads have been targeted using cookies and user data for years, and they currently have about ten times the click-through rate of traditional Facebook ads based on Facebook data. Most market analysts have predicted that, by adopting Google’s model, Facebook will increase its click-throughs and ad revenues by at least 50%. While it can be tempting to want to use traditional Facebook advertising because it has access to otherwise inaccessible customer data, the numbers just don’t lie.
But even without the opinion of analysts, you can tell for yourself that Facebook Exchange just makes good business sense. By targeting only potential customers who have visited sites in your industry, or only customers who have indicated they were thinking of purchasing a product, you can make your ad money go farther. Instead of targeting a wide range of people whose Interests include your product, but may not have wanted to buy your product in years, Facebook Exchange advertising targets only those people who have had a recent, demonstrated interest. With Facebook Exchange, you will run fewer ads, but see more interest. It is the future of Facebook advertising.
Large DSPs connected to Facebook Exchange include AppNexus, DataXu, MediaMath, AdRoll and Turn. You can read more about Facebook Exchange at Bloomberg, Forbes, and the tech blog Gigaom.

Steve is a Social Media Manager at TechWyse, an internet marketing firm based in Toronto, Canada. TechWyse specializes in SEO, PPC and Social Media Marketing. You can read more of Steve’s writing at TechWyse.com/blog.

Steve is a Social Media Manager at TechWyse, an internet marketing firm based in Toronto, Canada. TechWyse specializes in SEO, PPC and Social Media Marketing. You can read more of Steve’s writing at TechWyse.com/blog.