Home Social Media The Publisher Impact Of Facebook Exchange And Ad Network

The Publisher Impact Of Facebook Exchange And Ad Network


publishersThere’s been a lot of talk about about how a Facebook Exchange or a Facebook ad network will benefit buy-side interests looking for reach, frequency and better performance. But, what about publishers other than Facebook? – where will they stand as Facebook rolls out these new ad strategies? AdExchanger reached out to a selection of ad ecosystem executives for their opinions. We started with the following questions:

“What effect will the Facebook Exchange have on publishers? And, what if there’s a Facebook ad network – what’s the impact on publishers?”

Click below or scroll down to read opinions:

Ben Kneen, Director of Ad Products, WebMD

“While most people would be more concerned about the Facebook Exchange than the Facebook Ad Network, I’d actually say the opposite is true. Sure… if you’re a publisher, and Facebook starts an extension network a la Amazon, you can imagine there being greater demand in the real-time bidding (RTB) market, but where is that demand going to come from? I think it just puts more pressure on direct budgets for most businesses; blasphemy, I know, but it’s no secret that a lot of branded publishers have faced some pretty punishing competition from the exchange market this year. It’s not really comparable quality, but such is the appeal of cheap clicks. Getting access to Facebook data and more cheap inventory will probably just make that phenomenon worse for those companies, and shift more demand out of publisher sales teams, sorry to say.

The exchange on the other hand, because it uses native ad formats, is probably less of a threat to direct publishers longer term in my opinion, and will likely be thought of as a unique channel, kind of the way we think about search vs. display. In the short term it’ll likely be negligible for the big pubs – Facebook has made it easy to buy through advertiser’s preferred platforms, and it’ll be the shiny new object to tell clients about, not to mention incredibly cheap because of the sheer supply. A dent in RTB revenue isn’t as scary as direct revenue, though.

Marc Kiven, Founder and CRO, BrightTag

“The Facebook Exchange is set to inspire a new era of measurement and accountability not just for Facebook inventory but also for social as a channel across the digital advertising landscape. The Facebook Exchange should afford marketers the ability to get scale on highly accurate audience characteristic-based impressions coupled with social context data (likes, fans, etc), which should give the buy-side more confidence in allocating budget away from non-digital channels.

Hopefully, from this we could see a good ripple effect for publishers as a whole. More measurement also allows buyers to learn how to better leverage their data – intelligence that can benefit publishers greatly on the premium side.

One could argue that the effective CPM of an ad impression is related to a combination of factors including size, location, scarcity, audience characteristic (demos, frequency, etc), and context. If a publisher isn’t driving value for marketers based on those factors, then the influx of Facebook impressions could depress value for those publishers. If the leading source of revenue for a publisher is sending impressions out to RTB – then that publisher isn’t going to like the result of Facebook joining the party as an Ad Network or Exchange.”

Tom Shields, Co-Founder and Chief Strategy Officer, Yieldex


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“The Facebook Exchange is a separate ocean from the current world of RTB exchanges, and as such, will likely have very little effect on most publishers. One way to think of it is as a really big private exchange, with a good underlying DMP. While it is possible that the sheer size of this pool will siphon off significant dollars from the rest of the RTB universe, my personal opinion is that marketers will use this as a way to increase their budgets. If so, the rising tide will lift all boats, and the actual effect will be minimal.

A Facebook ad network would likely affect publishers the same way Google AdSense does – as a source to get somewhat higher yield for remnant inventory. Publishers who traditionally get most of their revenue from ad networks and exchanges will find this a welcome addition. Marketers will likely put the FB ad network in the same bucket as the other large reach ad networks and exchanges, so I would think Yahoo, Google, Microsoft, and AOL would be the most worried about losing budget dollars. Conversely, publishers who rely primarily on direct sales will probably feel little short-term impact.

One other area Facebook could make a significant impact is in ad effectiveness measurement, one of the most-cited problems of brand advertising. Facebook’s unique reach could enable it to compete aggressively with ComScore and Nielsen while deepening its relationships with brand advertisers.

The more interesting question is what publishers can do to prepare for the possibility of a Facebook ad network. Facebook could be a new source of high-quality data, and publishers should be prepared to take advantage by finding solutions, people, and processes to sell audiences and not just context. And if Facebook does start doing brand attribution measurement, publishers will need to incorporate that data into their yield optimization strategies.”

Josh Wepman, Director, GCA Savvian Advisors

“As currently constructed, I think the Facebook Exchange (FBX) has the potential to both help and hurt publishers – though, on balance, it is likely to have more of a negative impact. Based on what I’ve heard from industry sources, the performance of the inventory bought through FBX has been excellent and advertiser interest continues to be strong. This was confirmed by Sheryl Sandberg on the earnings call last week. As a result, I’d expect that, over time, a greater volume of display advertising will be bought via the FBX, likely at the expense of non-Facebook Exchange-traded display inventory (unless ad budgets grow more than forecast). This dynamic will, at least in the near term, be detrimental to publishers given the growing importance of the RTB sales channel. Publishers and ad exchanges may find themselves competing with the FBX for RTB ad dollars. While there is a likelihood that they can compete on price, it is more likely, in my opinion, that the battle will be lost over performance. That said, in the long run this may help publishers by increasing the overall market price of RTB inventory.

The result may be different if Facebook begins selling non-Facebook inventory (via FBX or otherwise). If this “ad network” leverages Facebook’s robust / unique data on user likes, preferences, social connections, etc. and applies it for targeting purposes, it is likely that advertisers would be willing to pay a premium. This should result in a higher yield for publishers than what they would otherwise experience by selling non-direct sold inventory through a traditional ad network or via traditional RTB channels. This is where Facebook ad tech gets interesting and has the potential to benefit all constituencies: advertisers (improved performance), publishers (increased yield) and Facebook (increased ad revenue), a win-win-win!”

Dave Yovanno, President, ValueClick‘s Mediaplex division

“I don’t think the Facebook Exchange will have any material impact on publishers – positive or negative – beyond that which has already been felt. Advertisers are already buying ads on Facebook, and Facebook is now giving advertisers access to the same inventory via real-time bidding. In addition, it’s important to note that Facebook is still using ad formats that are specific to them, which reduces any negative impact on publishers who run industry-standard sizes. The FBX will have about the same impact as someone like Yahoo! or AOL making some of their inventory accessible via RTB along with traditional sales channels. It’s just a change in the way advertisers can access the same inventory.

A Facebook ad network, on the other hand, might have a slightly positive impact to publishers. I say slightly, because while Facebook may well increase demand for standard display ad units on third-party publishers, they will also likely keep a high portion of the margin for themselves. This assessment could go from ‘slightly positive’ to ‘positive’ if Facebook allowed ad networks and publishers to use Facebook data while still maintaining proper user privacy and data ownership controls.”

Jon Steinberg, President and COO, BuzzFeed

“The Facebook Ad Exchange (FBX) will allow Facebook to become the single largest owner of direct response inventory. The company has 28% of display inventory right now (according to comScore), by layering re-targeting data (cookies on where users have previously visited) on top of the small right rail thumbnail units, Facebook will perform a type of alchemy, significantly increasing the value of these ads.

Given the size of FBX, it seems unnecessary for Facebook to prioritize the building of a 3rd party ad network, it’s own Adsense (despite its test running ads on Zynga.com), because it has so much of its own inventory. This is not to say the company won’t try and do both simultaneously.

FBX ads will likely become the defacto way to re-engage consumers who perhaps visited a site during the consideration phase and moved on before purchase. Almost any direct response product seller, will be able to re-target or find their users on Facebook and determine in real-time the ROI in bidding for them.

Given Facebook’s scale, this could put pressure on direct response pricing for publishers that make the bulk of their revenue through ad networks or bottom of the funnel advertising. However, I think publishers can alternatively leverage FBX inventory to seed or extend their own direct-sold premium campaigns, as well as campaigns with social-oriented KPIs.”

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