Facebook has been working on a big improvement to its display ads—those small “Marketplace” ads displayed on the righthand side of its desktop website.It’s called Facebook Exchange (FBX), and some of its partners are now reporting they’ve seen improvements in clickthrough rates and cost per acquisition.
But FBX leaves out the most important ad products Facebook is working on—its social and mobile ads.
In a nutshell, Facebook Exchange, or FBX, lets advertisers use automated systems to bid for ads and place them in real time, using information about users gathered from their visits to other websites. Google and Yahoo have similar systems.
But it simply brings that common Web-advertising technique known as retargeting to Facebook ads, while leaving out most of the things that make Facebook special.
“There’s no social element,” says Rob Leathern, CEO of Optimal. He should know: Optimal participates in Facebook’s Preferred Marketing Developers program, a group of ad-technology companies that help advertisers and agencies manage campaigns on Facebook.
Facebook has acknowledged that social ads perform better than nonsocial ads. But it’s harder to develop a smart social campaign than it is to simply run ads that consist of images, text, and links.
We’ve talked to a bunch of startup entrepreneurs recently who are bullish on Facebook advertising. They’ve become avid students of Facebook ads because they need to figure out cheap ways to acquire users.
The secret, they say, is not to run simple links to your website, but to get users to like your Facebook page. Ads that promote likes are generally far more effective than ads which feature links—and ultimately cheaper, since you can keep marketing to your page’s Facebook fans.
Some big advertisers are figuring this out, too. Leathern says that 70 per cent of the ads his clients run are social in nature.
“If someone only does FBX retargeting ads, they’re missing a large part of the story,” Leathern says.
Here’s what you can’t do with FBX:
- Sponsored Stories. These ads, which appear in users’ news feeds, are the best way to use Facebook’s word-of-mouth dynamics.
- Open Graph Sponsored Stories. A twist on Sponsored Stories, these ads report a specific action, like listening to a song or reading a news article. Optimal says these ads perform three and a half times better than the Marketplace ads one can buy via FBX.
- Mobile Sponsored Stories. This is the primary way to buy ads on Facebook’s mobile apps—there’s no equivalent to the ads sold on FBX.
- Mobile App Installs. This program, which encourages users to install a specific app, can’t be purchased via FBX.
The good thing about FBX: It’s easier to run campaigns on both Facebook and other websites at the same time. And real-time bidding allows for the placement of time-sensitive campaigns.
But using FBX—at least for now, until Facebook is able to bring its social advertising products onto the platform somehow—means missing the best ways to advertise on Facebook.
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