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Facebook’s new Atlas is a real threat to Google display dominance

Okay, Google, watch out. I was underwhelmed by Facebook’s last big advertising announcement – the Facebook Audience Network for mobile app promotion. But last week’s Atlas re-launch during Advertising Week is a different story. While Facebook is exaggerating the necessity of an ad server that doesn’t rely on cookies, it is very much on-trend with digital marketing buzzwords like programmatic buying and cross-platform targeting. Google’s DoubleClick empire is officially under siege from a well-armed horde.

What it means

Google and Facebook are Numbers One and Two in the $140 billion digital ad market, though Google has three times Facebook’s market share. Facebook has been rapidly closing the gap in the $30 billion mobile segment. Each makes most of its money selling its own inventory, but Google has a big business in ad networks and exchanges for placing ads on other publishers’ sites. Facebook has still only dipped its toe into ad networks, and its exchange is mis-named – FBX connects Facebook inventory with ad networks via demand-side buying platforms (DSPs), but it isn’t a “network of networks.” Facebook is lining up agencies and data partners to make this work outside its own walled garden.

Ah, but Atlas is a legit ad server, and Facebook is aggressively promoting its ability to help advertisers target audiences as they move across content and apps with multiple devices. Facebook is playing its identity management card against cookies. Google’s targeting is primarily based on cookies, which don’t work on mobile phones and get confused across users, desktops, and devices. Of course, Google has its own log-in authentication services, but Google+ ain’t cutting it, even with Gmail help.

Facebook’s “people-based” marketing pitch is overstated. Lots of useful ads are sold via contextual and behavioral targeting. Search and behavioral targeting are far more indicative of purchase intent than authenticated demographics and Likes. Most of the time, I may act like an aging male Yuppie – all right, an ancient one – but when I’m Christmas shopping I act like my 20 year-old Southern niece. Don’t show me vacation-home ads that week, please. (Facebook does plenty of behavioral targeting itself and will continue to do so.)

Whom it affects

Google still makes most of its money off search, and off ads shown on its own collection of properties. But advertiser and agency interest in Atlas is a real threat to the hub of its display ad networks.

Apple proclaims that it’s not in the personal data business. Maybe it should be. It’s increasingly hard to take its mobile ad network seriously, which means plenty of opportunity for third parties.

Portals and private exchanges should jump to accommodate the new Atlas. The more, better-targeted inventory, the merrier. Aol, who’s way ahead of Yahoo or Microsoft (that sold Atlas to Facebook) in building out its marketing-tech platform and ad networks, is a potentially surprising wild card here.

Advertisers and agencies that I told to hold off on the Audience Network, jump on Atlas. At the very least, you’ll open up negotiating room with Google.

Besides a full-blown ad network, Facebook still lacks major pieces of a marketing-tech platform. It has signed up Neustar for help with a DMP – one of the most critical components in our Gigaom Research analysis (see report). But Atlas is a big move with an appealing message, particularly for mobile targeting (see report).