BMO Capital Markets analyst Dan Salmon did the world a favour on New Year’s Eve when he published a note to investors that included a diagram of how Facebook’s ad exchange, FBX, actually works.
FBX is a real-time bidding ad exchange in which advertisers drop tracking cookies on users’ browsers as they surf the web — shopping, for instance — and then retarget those users with ads once they enter Facebook, perhaps to remind them to come back to the sites they were shopping on.
The end result for the user: If you were looking at airline tickets on JetBlue and then visit Facebook, you might start seeing JetBlue ads on Facebook.
Sounds complicated, yes? This pretty picture should help:
Photo: BMO Capital Markets
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.