A few short weeks ago, Facebook unveiled its newest form of monetization at the annual F8 conference called the Facebook Audience Network.
Now that Facebook is a publicly traded company, there’s more pressure than ever for them to continue pushing the boundaries on monetization.
In 2013 when Facebook released mobile News Feed ads, its revenue exploded; it doubled almost overnight. In the first quarter of 2014, mobile News Feed ads accounted for 59% of the social network’s ad revenue.
Facebook has penetrated most of the connected world, and as a result user growth rate is starting to decay. Acquiring more users isn’t a solution to increasing revenue for Facebook anymore. To remedy this, Facebook is looking for new ways to leverage its massive database of user data across the web. Enter the Facebook Audience Network.
The Facebook Audience Network will allow advertisers to place mobile ads on external websites through Facebook’s ad platform, for the first time ever.
While there hasn’t been much information released about the Facebook Audience Network, there are some no-brainer guesses we can make as to where Facebook is going with this. Here are four of those predictions:
Prediction #1: Pricing Will Work on a CPC Basis
Facebook is going to have to work hard to maintain the quality of the audience network. This is Facebook’s first foray into selling off site media, which is completely unchartered territory.
If they truly want this to work, Facebook has an obligation to protect the advertiser from ineffective placements while also protecting website owners from irrelevant and low-quality advertisers. Striking the right balance is going to take lots of testing and realignment as they gather feedback and data from initial tests.
For that reason, charging on a CPC basis is likely going to be the only option when the audience network becomes publicly available. CPC bidding ensures the advertiser only pays when they’re actually receiving traffic and the website owner will benefit from high-performing ads, so it’s a win-win.
CPM bidding will likely be released in a later iteration of the audience network, but not before some initial testing and tweaking.
Prediction #2: Creative Will Consist of Both Text & Display Ads
Up until now, Facebook has only offered display-based advertising. Some of the placements on Facebook allow you to add text, but the image is always the centerpiece of the creative.
The Facebook Audience Network will have both display ads and text ads – similar to Google’s paid search advertising. This is where copywriters will be rewarded for well-thought-out messaging in lieu of fancy graphics.
Prediction #3: Demographic & Psychographic Bidding Will Differentiate Facebook from Google
At the heart of the audience network will be demographic & psychographic bidding. This is the same user data Facebook has spent the last 10 years collecting and dumping into Open Graph. This data is what differentiates Facebook from any other social network, startup, or website in the game.
With the public release of Open Graph and the myriad of new Facebook products coming out, more data points are constantly being added to Open Graph, which includes everything from life events to emotions users are feeling to favorite interests & hobbies. All of this will eventually be targetable.
Facebook still hasn’t ventured into real-time or keyword-based bidding, which leaves tons of opportunity for new ad offerings in the future.
Prediction #4: Facebook Will Allow Direct Site, Contextual, and Interest-Based Placement Bidding
Facebook will give us several options when it comes to where we want our ads to show up.
First, they’ll let us choose which websites we want our ads to show up on. This gives advertisers the ability to be as picky as they want about where their brand is appearing, and more importantly, where it’s not appearing.
The second option Facebook will offer is contextual placement bidding. This will let us choose a keyword or set of keywords relevant to our product or service so websites that mention those keywords will show our ads.
The third and final option will be based on data contained in the Open Graph. Instead of targeting websites and keywords, we’ll be able to target profile interests and user demographics.
Of course Facebook will also allow you to use all of these placement targeting options in any combination to find the most optimal mix for your business.
The targeting will be similar to the Google Display Network with Open Graph data adding a completely new targeting dimension. As advertisers, we’ll have the ability to be as granular as targeting 30-45-year-old men who like Ford and are reading an article about pickup trucks on Trucks.com.
Hopefully you’re starting to see the raw power in the data Facebook has at its disposal.
Putting It All Together
For the time being, the audience network will only be available on mobile devices. With that said, my intuition tells me Facebook will quickly scale out the audience network to desktop computers once they get a better idea of how it impacts the bottom line.
The audience network is also an opportunity to fix the scalability issue of Facebook ad campaigns. When you’re advertising on Facebook, ad targets generally get burned out extremely fast and you’re forced to constantly try new things, even if your campaign is working well. The audience network will help fix this and prove that Facebook ads can be just as scalable as any other paid marketing channel.
Are you currently leveraging mobile advertising on Facebook? Do you plan to test the Facebook audience network for your business? I want to hear from you – let me know in the comments!