Facebook Breaks Into The Mobile Exchange Space

trefgarne-liverail-fbWelcome to the real Facebook Exchange.

Facebook is using its F8 Developer Conference in San Francisco, where it trotted out its Audience Network one year ago, to unveil an expansion of its publisher-facing ad tools.

The big news is this: Facebook has extended the capabilities of its LiveRail video SSP – acquired last summer – to support exchange-based monetization for in-app mobile display formats. Those formats include native ads, where Facebook arguably wrote the book, as well as less exciting but higher-volume interstitials and banners.

Additionally, and perhaps as significant as the mobile extension, LiveRail’s platform now comes with Facebook’s cross-device identity solution baked in. The “people-based marketing” capability was rolled out last year and includes anonymous demographic information as an available targeting factor.

That seemingly drab data set (gender and age only) could be very helpful for the video publishers that make up LiveRail’s core customer base today. That’s because digital video sellers are under increasing pressure to provide GRP-equivalent measures for television media buyers that target mostly on those same data points.

“LiveRail is extending everything we’ve done in video into in-app mobile display,” said Facebook Product Director (and former LiveRail CEO) Mark Trefgarne. And by enabling anonymized age and gender targeting within the system, he said, “We are making it possible for publishers to accurately reach their audiences and forecast and measure accurately against that information.”

Facebook’s move into exchange-based monetization for mobile apps could turn LiveRail into a formidable competitor to established mobile exchanges like Twitter’s MoPub, Google’s DoubleClick Ad Exchange (which has mobile support) and Millennial Media.

The core challenge for all of these players, LiveRail included, is to make ad serving and yield optimization as smooth and lucrative as possible for app developers. Despite Facebook’s late start (MoPub has been at it for four years), Trefgarne says the company has a credible opportunity to pull this off in light of its mobile display chops, its integration with 2 million advertisers globally and its existing relationships with app developers.

But Facebook’s move into network mediation for mobile apps is a rare case where it’s following in mobile rather than leading. Google has long offered support for mobile banner and interstitial formats. And MoPub claims 170 billion ad requests a month across both banners and native formats, and on more than a billion unique devices. It is plugged into approximately 140 demand-side platform companies whose clients actively bid on the exchange.

By contrast, LiveRail has traditionally served the video ad-serving and yield-management needs of publishers like A&E Networks, Dailymotion and Gannett. Its push in the app ecosystem will require new integrations with demand-side platforms, trading desks and mobile ad networks such as Facebook’s own Audience Network.

With the addition of mobile app inventory to its exchange platform (desktop display and mobile web ads are not supported for now), Facebook has clearly anointed LiveRail as its consolidated solution for the sell side.

“Think of Atlas as being our primary stack for marketers, helping marketers manage cross-device campaigns,” Trefgarne told AdExchanger. “Think of LiveRail as being the other side of the coin, the mirror image for the publishers. Its people-based tools that allow them to accurately deliver against people using their applications.”

As he helps his SSP evolve into a mobile yield optimizer for apps, Trefgarne says he has been struck by the performance of native relative to mobile banner ads, both from a marketer and a developer point of view. According to Facebook’s self-reported numbers, native ad sees on average 7x better performance than banners for publishers that run both using Facebook Audience Network.

“It’s a fundamentally better format for mobile monetization,” he said. “We think we’re going to help really accelerate transition of mobile away from banners toward native, and then I think we’re going to see that mobile monetization becomes a huge growth area.”

The inclusion of Facebook’s people-based targeting presents a related but distinct opportunity for media sellers. With its addition to LiveRail, both video and mobile publishers gain the ability to offer more accurate audience targeting, deduplication, forecasting and reporting tied to user logins. Not only that, they can now access basic demographic data drawn from Facebook user profiles that Facebook passes through to Atlas and LiveRail.

For video publishers in particular, the seemingly rudimentary demo targeting could help please TV buyers.

“We’ve always been held to post-campaign report from Nielsen or comScore that say, ‘This is how many impressions you delivered against the intended target,'” said Jason DeMarco, ‎director of yield optimization at A&E Networks. “We never had the opportunity to proactively target against those segments.”

He added, “This is leveling the playing field by introducing an element of targetability.”

Bloomberg and AdAge previously reported on some details of LiveRail’s mobile expansion.

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