Facebook is forming a team of powerful tech firms to establish Facebook Audience Network, a division that allows thousands of marketers, publishers, and developers to earn more revenue by providing them with a “header bidding platform” which will compete with Google’s Dynamic Allocation Platform, the program that chooses which ads will show on top of the SERPs.
The ad industry was not a fan of the fact that Facebook did not offer full access to their inventory and data, making this new arrangement an interesting and nuanced one. This new improvement, however, is another sign that Facebook wants to extend an olive branch to adapt to the market and perhaps overtake its biggest competitor, Google.
The new header bidder gives marketers a chance to increase their reach online, while giving Facebook a bigger piece of the pie. At present, Google takes up 33% of global digital advertising revenue, while Facebook takes about half with 16.2%.
Once header bidding is released, advertisers get a chance to bid for their clients on premium ad space that used to be disseminated through hidden algorithms. Before, advertisers and publishers had to place their ads in the dark, not knowing where it will go and who will see it. Only after their Facebook insights are published do they have a better view on how their ad performed.
With header bidding, they can choose when and where to post their ads, provided they give the highest bid during the auction. Publishers and brands see this as a way to improve sales and revenue, while ad tech firms benefit from it because Google will lose about 40-50% of their take on global digital marketing.
Included in the roster of ad technology firms are AppNexus, Media.net, Sonobi, Index Exchange, Sortable, and Amazon. The reason for the collaboration is because Facebook will not be providing header bidding technology, rather these companies will serve as the primers for the first bout of bids. Next in line would be publishers who use open source biddings like PubFood and PreBid.
Testing of Facebook Audience Network showed that the Daily Mail experienced a boost in ad revenue that was 2-3x higher than their previous intake. Facebook’s own test shows a 10-30% rise in revenue as well.
According to Facebook, in order to qualify for Facebook Audience Network, the firm must adhere to the four principles that the company established, namely:
• The ad space goes to the source willing to pay the most
• All demand sources get the same information at the same time
• A diversification and stability of revenue for publishers
• There is no arbitrage, no “averaged” waterfall and no secret auction manipulations by a demand source
Amazon is one of the companies part of Facebook Audience Network
Google is working on its own bidding platform called EBDA (exchange bidding in Dynamic Allocation); however, there is no word yet on how it will fare upon its launch, nor is there any clue as to when ad firms and publishers will gain access to it.
The past year shows that Facebook has been slowly building a collaborative network with both tech companies and brands to improve Facebook’s performance as well as offer the other parties a significant monetary increase in their revenue.
Now, it’s the advertisers’ and publishers’ turn, leading us to believe that Facebook is forming a Justice League of digital warriors to take on global media, advertising, and digital marketing arena.