What is the major difference between advertising on Facebook and Google? By typing in a search term, users of Google show “purchase intent” for a specific item, while at best Facebook users’ demographics and general interests can be identified. This means that Google is great for targeted ads while Facebook is better for general brand marketing.
Facebook is aiming to change this paradigm with Facebook Exchange (FX), an imminent collaboration with a number of different Demand-Side Platforms (DSPs).
At the outset of FX an identifying cookie is placed by Facebook on each of its user’s computers. The cookie allows DSPs to recognize the users when they visit a monitored online vendor, and when the all-important purchase intent is shown, the DSP will drop another cookie on that user’s computer. In the eventuality that no purchase is made the DSP will contact Facebook, identify the user, and then wait patiently for notification from Facebook that the marked user has returned to the social network.
The moment of “re-entry” to Facebook is important; at this point the social media platform will contact all of the DSPs who have put a tag on the user and will open up a bidding session among them. The winner gets to show a highly-targeted advertisement to the user.
Let’s say I visit the website of a gym but click out without purchasing anything nor even requesting more information. When I get back to Facebook I could find an advertisement telling me that a 6-month membership to the gym costs 50% less if I buy in the next 24 hours.
Facebook says that users who disapprove of such ads will be shown a link to the DSP where they will be able to disactivate them; however there will be no simple one-click way to opt completely out of Facebook Exchange. It is hard to know how the general Facebook public will react to the targeted advertisements; while some might find them intrusive, others may be happy to see more ads for things they have a real interest in buying and less irrelevant distractions.
Having a highly-targeted ad delivered on Facebook will certainly be valuable for any business; moreover the instantaneous nature of the bidding and delivery system make it the perfect terrain for time-sensitive advertising. After Usain Bolt won his 4th, 5th, and 6th gold medal in these Olympics, Visa modified their television advertisements which already featured the Jamaican sprinter to congratulate him on still being the world’s fastest.
Internet advertising can react to such events much more quickly than television can, and with the introduction of FX, Facebook and its partners will be able to identify those users who have watched a particular sporting event online and target them much in the same way that Visa is sure that it will reach Olympics sports fans by advertising on NBC.
Keep your ears open for news about Facebook Exchange; if it works it may cause a revolution in online marketing, making it easier for online vendors to effectively reach the part of the public which is most relevant to the goods and services they offer.
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