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Summary:

On Thursday, Facebook is announcing that its new real-time bidding platform, the Facebook Exchange, is coming out of beta. While it’s still early days, the social network’s advertising partners give the new platform high marks.

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Three months after Facebook revealed plans to bring real-time bidding to advertisers on its site, the Facebook Exchange is officially open for business. And, early reports from ad partners look positive.

In a blog post today, the social network is set to announce that its new exchange – which allows advertisers to target ads to Facebook users based on their general web browsing history – is opening out of a beta test period involving more than a dozen demand-side platforms (DSPs) and a limited number of brand advertisers.

Through the new exchange, Facebook and its partners use cookies to track user web browsing behavior and then serve up related ads on Facebook. For example, if you go to a travel site to search for a flight but then don’t complete the booking, the Facebook Exchange makes it possible for the travel site to bid in real-time for the opportunity to show you a relevant ad when you return to Facebook.

Partners report increased ROI for Facebook Exchange advertisers

Zach Coelius, CEO and co-founder of Triggit, one of the partners, said that although Facebook has come under recent scrutiny as an effective ad platform, from his observation, Facebook’s ads are well-placed and attract a strong level of engagement from users.

“Facebook as a platform has gotten a bum rap,” said. “But we’ve never seen anything as good as this.”

In the three-month test period, Triggit found that ads served through the Facebook Exchange generated an average of four times the return on ad spending compared to traditional display retargeting and resulted in a click-through conversion rate that was 2.2 times higher. The cost per click-through order for Facebook Exchange ads was also 6.5 times lower, the company said.

While ads served through traditional RTB display are typically just seen by consumers when they return from work, during their leisure hours, Triggit found that Facebook Exchange ads are more consistently seen throughout the day. Their data also show that conversions on the Facebook exchange are twice as likely to happen in the first two days than they are on traditional display.

While the volume of ads served at the beginning was small, Coelius said, Facebook rolled out a full-scale RTB (real-time bidding) exchange faster than anyone else Triggit has worked with.

Other partners also report strong results. New York-based AppNexus said advertisers who worked with its client Accordant Media, a digital media buying and optimization firm, were able to increase their reach through the Facebook Exchange while reducing their cost per action by as much as 25 percent. Advertisers with business marketing firm Bizo were able to increase audience reach by 30 percent while maintaining impression and conversion rates, AppNexus said.

Still early days

Retargeting platform AdRoll said that, on average, Facebook Exchange advertisers saw an average Return on Investment of 16X, which is on par with standard display advertising channels.

Adam Berke, AdRoll’s president, said that while his clients had positive experiences with the new exchange it’s still too early to make conclusive generalizations given how different Facebook’s inventory is and how differently advertisers bid on its platform.

“It’s so early in the roll-out of the exchange,” he said.  “Anyone who feels like they have a fully-baked Facebook Exchange product and knows exactly how it performs is probably coming to conclusions a little too soon.”

For Facebook, which has seen its stock price lose nearly half its value since going public in May (the stock got a bump this week after CEO Mark Zuckerberg’s first public interview), the new exchange could be a critical way for the company to show its value as an ad platform and earn revenue.

Last month, amid reports of underperformance through the first half of 2012 and questions about the effectiveness of some of its ad products, eMarketer, cut its 2012 revenue projections for Facebook from $5 billion to just over $4 billion.

  1. FB needs to go the way of the AOL’ s and Myspace’s before it! Conventional advertising also needs to evolve into something valuable instead of something detrimental to the user experience.

    I dont click or buy from tracking advertisers and know other folks who do the same.

    I wonder if anyone broaches negative branding with these clients whose service providers piss off users?

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