Facebook Leading the Disruptive Age

Facebook filed yet another patent on Thursday April 9, 2015 for a mega ad exchange that will go beyond the social network’s platform. Think it’s not a big deal? Well, think again. Sure, Facebook submits patent applications quite frequently but, this one could most certainly change the ad-tech world forever, if it comes to be a reality.

Facebook currently operates two ad network platforms, FBX and LiveRail; however, their reach is limited to the social network, and video within mobile apps, respectively. With this latest patent, Facebook could either run the new platform as an extension of the LiveRail platform or build an entirely new ad exchange network. Either way, this could have a huge impact for advertisers and content marketers.

So, what’s the opportunity?

Facebook’s ad network could become a marketer’s Holy Grail. Think about it. The social network knows almost all there is to know about the 1.35 billion inhabitants currently using the platform on a daily basis. Facebook knows everything a user provides in their profile, their browsing history, their purchase history, and even who their “friends” with and how they’re related. And there’s more. Facebook knows the brands users follow, “like”, and interests across categories. Not to mention, all of this data is provided voluntarily by the user.

What makes this new ad exchange so revolutionary is that it combines an advertiser’s data with Facebook’s own social graph—which is “the global mapping of everybody and how they’re related”—to find users that match a specific profile and then retargets them later on. The big idea is that Facebook’s data can then be used across other media properties, and would no longer be limited to just Facebook.

There’s also a huge opportunity with the type of content that can be placed within the exchange. That content can be a normal ad, a video, a Facebook wall post, news article, photo, or gaming app. The latter options, as opposed to a normal ad, gives marketers the chance to develop content that feels native to the application, which would likely generate more engagement. In fact, a study conducted by Sharethrough and IPG Media Labs found that consumers looked at native ads 53% more frequently than display ads. Moreover, native ads registered an 18% higher lift in purchase intent and 9% lift for brand affinity responses than banner ads.

The mega ad exchange, should it come to be, will be undeniably powerful to marketers – it’s socially-driven and able to operate across a multitude of media channels, as well as in any format, all while serving up both ads and content that are customized and personalized.

What does it mean for Google?

With all that being said, should Google be worried? Although the search giant continues to dominate the digital advertising space (as of 2014, they had 31.10% or $45.5 billion of the net digital ad revenue share worldwide), Facebook has the potential to really take a bite out of those numbers. The main advantage Facebook has over Google is its data. Google’s user information is based on an algorithmic science that takes into account on what sites the user visited and what search terms were used, whereas Facebook doesn’t need to guess—they’re told. Facebook also has the social advantage—they have a more intimate connection with users and know their personal “likes”. And since it is a social platform, Facebook users can control and customize the information that they want to receive.

What’s good for the goose?

So now that we understand how this could impact marketers, what about consumers? Facebook has frequently been under fire from privacy advocates who criticize the network’s use of people’s data for advertising. However, what many fail to realize is how users stand to benefit from Facebook’s ad exchange as well.

When you think about it, targeting has always been a common practice—every year, companies collect more and more data about the consumers that buy their products. It just so happens that Facebook has access to a considerably greater pool of data, which is where the fear stems from. In reality, Facebook is making data mining much more transparent—it’ll be the first major Internet company to actually show consumers how specific ads are linked to a particular assessment of their profile and interests. For the first time, users have the power to alter their ad profiles, giving them more control over than ever before—empowering an already powerful consumer.

And that’s not the only benefit. Users are bombarded with a plethora of ads and content at all times throughout the course of day, most of it irrelevant and not in line with their interests. The social network’s new exchange will allow companies, brands and marketers alike to serve up content and ads customized to the user’s Facebook behavior and profile. Eventually, gone will be the days of users having to sift through endless feeds of irrelevant and unwanted content. We think that sounds like a win-win for both marketers and consumers, don’t you?

Change is inevitable