Facebook Ads have been around for quite some time but until recently, few people have taken them too seriously. Even just this year GM made quite the buzz when they pulled their entire $10 million Facebook Ads budget just before the IPO. Surrounding their high profile IPO was much talk about how to monetize those ads and specifically how to do it on mobile devices. One huge opportunity for Facebook Ads revenue that hasn’t gotten much attention lately is the possibility of an external network for Facebook ads.
In June Facebook started rolling out ads on Zynga in a rev share partnership with the gaming giant of the time. The ads looked exactly like the Facebook ads you see on Facebook and used the same targeting criteria… they were just on a different site. I see this as one of the biggest opportunities in the future for Facebook to drive revenue and for advertisers to turn Facebook into a profitable marketing channel.
Let’s dissect this a bit further and examine exactly how it would benefit both Facebook, advertisers, and publishers.
Currently Facebook makes money by selling ad inventory to advertisers through their self serve ad tool and third-party ad management platforms. This revenue is limited to how much inventory they have (which is limited by how many pages users view on Facebook). By creating an ad network (much like Google AdSense) they lift the gates on that inventory and limit it only by how much inventory their publishers can offer. So how would it work for the publishers?
If you’re familiar with Google AdSense, Facebook’s external ad network could function in a very similar fashion. Website owners apply to be in the network and after approval from Facebook, they designate certain areas of their site to show Facebook ads. From there the rest is automated by Facebook’s ad-serving engines and the publishers simply get a rev-share of every click (or impression) that occurs on the site. Who pays for that click? Well that’s where the advertiser comes in.
This is where it gets exciting. Facebook ads are great for their unique ability to target users based on a multitude of very specific criteria. Despite this, many advertisers cannot make them profitable for their business. Some say that people are not in a “buying mode” while on Facebook. Other’s say that it takes too much management time because the audience sizes are too small. Others say that the click-through rates are too low. Opening the doors to putting these ads on external websites could be the remedy to all of these complaints. Let’s look at them one by one:
- Not in a buying mode: now that we’re serving ads off Facebook, people could certainly be in a buying mode.
- Ad Fatigue: now that the ads are being served across the web, the frequency in each ad spot is greatly decreased because of the increased inventory. Now you don’t have to spend as much time refreshing ad creative.
- CTR’s too low: now the CTR’s could potentially rival those of traditional display media because of the limitless placement options combined with the hyper-targeting innate to Facebook ads.