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What Facebook’s FBX Closure & New Cookie Policy Means for Marketers

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Facebook recently announced two updates that aim to position the social network as the top audience-buying platform and increase its weight against Google’s AdSense network. First, the social media platform has decided to shut down its ad exchange (FBX) and second, it has expanded its cookie policy to serve ads to users who are not logged in or do not have a Facebook account. These changes have important implications for marketers as they will both limit Demand Side Platforms’ (DSP) reach within Facebook and increase its own reach outside of the network.

Shutting Down FBX

Simply put, FBX is Facebook ad inventory that DSPs buy to retarget users based on online browsing history (cookies) in a real-time bidding environment. By shutting down FBX Facebook becomes the sole vendor of audience data on the platform.

Advertisers that have been wary to use Facebook’s proprietary audience targeting tools for remarketing will now have no choice but to migrate their campaigns to Facebook before FBX shuts down on November 1, 2016.

Migrating campaigns to Facebook is more than just copy/pasting. It will require education on the platform’s unique bidding capabilities, new ad types and audiences, custom reporting and attribution methodology, and adding the Facebook pixel for retargeting. Though a daunting task, marketers who start to move their FBX campaigns will be able to take advantage of the social network’s self-reported user data, proprietary lookalike modeling and create advanced website remarketing audiences. They can also enjoy Facebook’s full ad suite, including Canvas Ads, Video Carousel Ads as well as Dynamic Ads on Instagram. Most significant, they will have access to Facebook’s mobile app inventory, which currently makes up about 90% of traffic for most advertisers on the platform. These new capabilities will help marketers find greater success on the platform than ever before.

Gaining access to Facebook Mobile and Instagram placements will require more thoughtful design as well. Marketers cannot repurpose ads from display, TV or other channels and expect the same effectiveness on Facebook. Most advertisers have already adopted Facebook’s best practices, but some may struggle with the need to invest in Facebook-specific creative and update their branding guidelines to align with social. To make thumb-stopping creative on the mobile feed, follow these best practices:

      • Make it personal
      • Be concise
      • Use 1×1 or vertical images and video to maximize real estate
      • Ensure video can be understood with sound off, captures attention within the first 3 seconds and utilizes close captioning

Though Facebook’s shut down of FBX does not directly impact how its users will engage on the platform, they may start to notice more retargeting ads on mobile and Instagram. Initially, users might find these ads intrusive because retargeting ads populate based on recent browsing behavior and feel more personal than ads that just drive awareness. As a result, advertisers should carefully monitor mobile performance and test multiple creative variables to shape a more positive experience for the user.

To most, the shutting down of FBX comes as no surprise. FBX first launched in 2012, less than a year after Facebook launched its own native ads API and Power Editor, to compete with Google’s DoubleClick Ad Exchange. At the time, Facebook’s advertising technology was nascent and brands were wary of advertising within its ecosystem. To increase adoption and revenue, Facebook launched FBX.

Since its launch, FBX has not evolved, and Facebook started to diminish it by adding competitive offerings such as the custom audience pixel, and dynamic ads. Users also started to shift towards video and mobile, where FBX could not compete as cookies can’t recognize people in-app. Within three years, mobile revenue jumped from 41% to 80%. This staggering growth in mobile led Facebook to drop 15 advertisers from the network during its revamp of the FMP (formerly PMD) program and solve for cross-device measurement using their logged in user base. Quite simply FBX just couldn’t keep up with advances in technology and consequential shifts in user behavior.

Updating the Cookie Policy

Just one day after announcing the Ad Exchange close, Facebook announced an updated cookie policy that will expand their Audience Network reach to users who do not have a Facebook account or are not logged in. The new policy states:

“We use cookies if you have a Facebook account, use the Facebook Services, including our website and apps (whether or not you are registered or logged in), or visit other websites and apps that use the Facebook Services (including the Like button or our advertising tools).”

Previously, Facebook could only serve ads to users who were logged in on their browser or app. With this update, Facebook moves from being an audience-first platform to being a full, audience-first network and expands its reach well beyond its 1.6 billion global user base. Advertisers who currently work with DSPs should test Facebook’s Audience network once this update becomes a targetable feature and determine whether Facebook’s audience-buying platform is more efficient than their current partners’.

Andrew Bosworth, VP of Ads and Business Platform at Facebook, is confident that this update will improve users’ interaction with ads across its partner sites, saying they will “show better ads to everyone”, citing how Facebook prohibits ads that are deceptive or for unsafe products.

In accordance with providing a positive customer experience, consumers will continue to have control of the ads they are served.

To most advertisers, Facebook’s move to cookie non-Facebook users contradicts their mantra over the past year of “People, not cookies.” Essentially, Facebook changed their policy in order to increase their reach, and consequently, revenue. By adopting cookies, Facebook can now compete where DSPs have a large footprint, after shutting down the ability of DSPs to advertise on their own ecosystem. Facebook claims that they have an advantage over DSPs and ad networks because of the data they have already collected on their 1.6 billion users. This information, Bosworth said, can “spot patterns in people’s behaviors and better infer what a non-Facebook user might be interested in based on a relatively small amount of information.”

 

 

Between the closure of FBX and the new cookie policy, there has been a tectonic shift in Facebook’s ad ecosystem and advertisers need to move quickly to take advantage of new, cost-efficient inventory. Advertisers who are currently utilizing FBX for remarketing should begin to manage their campaigns on Facebook through its native platform or API within the next two months to gather learnings and best practices before the end of Q3 so that they can enter Q4 fully confident that their campaigns will be efficient during the important holiday season. While managing their campaigns in Facebook, it is critical to test mobile inventory, Instagram, video and mobile-only ad formats.

Advertisers who are using Facebook’s Audience Network or considering it should be aware that cookie-based targeting capabilities will likely roll out in the future. As a result, they should plan to test Facebook’s Audience Network targeting capabilities against their current DSP and network targeting efforts to determine which serving mechanism drives more efficient results for their business objectives.