In Facebook's last earnings call, Sheryl Sandberg surprised some by saying the Facebook Exchange “is actually a very small part of our business.” That may be changing, as the company pushes more ad space into its RTB marketplace -- and there are signs mobile News Feed inventory is waiting in the programmatic wings.
"We believe FBX will become an increasingly important part of Facebook’s ad platform as retargeted ads move further into the Desktop and Mobile News Feeds," J.P. Morgan Internet analyst Doug Anmuth wrote in a research note today. "Our anecdotal checks suggest that FBX ads have increased notably in the Desktop Right Rail—often representing the majority of ads shown—and marketer feedback after a few months of FBX in the Desktop News Feed is positive."
Some FBX partners confirm this. According to Josh McFarland, CEO of TellApart, "Since Q2, Facebook has more than doubled in size for our clients and is now substantially larger in unique reach than Doubleclick. Much of this is due to the addition of News Feed, which continues to perform above even our highest expectations."
Anmuth predicts a rosy Q4 and 2014 for the company, citing the FBX bump and a broader base of entertainment advertisers. He also called out Facebook's stunning mobile revenue, which Anmuth and J.P. Morgan now expect will contribute 60% of all Facebook revenue by Q4. As a result they have upped their 2014 mobile revenue estimate by nearly $1 billion, to $5.95 billion.
To date, Facebook's programmatic and mobile businesses have grown in parallel, nonconnecting hockey sticks. That's expected to change.
In a recent "programmatic media lunch" with digital marketing execs, another financial analyst discussed the potential for RTB in the mobile News Feed with some important FBX partners. BMO Capital Markets Internet analyst Dan Salmon heard from IgnitionOne CEO Will Margiloff and MediaMath CEO Joe Zawadzki, who said they hope to see RTB in Facebook mobile inventory soon. They gave no indication of timeline however, and Facebook declined to comment.
MoPub also gives Twitter something Facebook doesn't have: relationships with publishers. In a conversation with AdExchanger, Twitter VP Product, Revenue Kevin Weil declined to comment on whether the company will activate its data through a publisher network. But if it does so, and Facebook follows suit by acquiring mobile publishers through an SSP or mobile exchange deal, it could raise the stakes considerably not only in mobile/programmatic, but also in native/programmatic and, for that matter, mobile/native.
Finally, video represents another revenue opportunity for Facebook, one that it has apparently put on ice for the time being. AdAge reported, and Facebook has confirmed with us, the decision to postpone the rollout of high-impact video ads in the News Feed. Facebook has not given a reason for the delay, which may include user experience concerns, a desire to wait for a dip in investor approval to play a new "revenue card" or suboptimal interest from brand advertisers at the $1 million to $2.5 million price tag it had reportedly sought.
Among ad formats, video is perhaps the least likely to be added to Facebook's programmatic mix in the foreseeable future -- at least of the sort that Facebook has been pitching to advertisers over the summer.