Search Marketer’s Guide to Facebook Exchange (aka FBX), Part 2
Published: December 11, 2012
Author: Chris Knoch
In last month’s post on a Search Marketer’s Guide to FBX, we covered several of the fundamentals of how FBX delivers ads, what types of ads, and some best practices with those ads. It was a good start, but there are many questions left. Below we’ll cover this very important topic:
How does an RTB (Real-Time Bidding) Exchange Work?
At the most fundamental level, just know that there are three basic players:
1. The Publisher – Let’s just simplify this to be the website owner seeking to show an ad in an existing ad spot on their site.
2. The Ad Exchange – This is an ad solution that provides a place for publishers to list their ad inventory, and for advertisers to bid for that inventory.
3. Demand Side Platforms (DSPs) – These are advertising platforms that allow marketers to manage their online media campaigns by facilitating the buying of auction-based display media and audience data across multiple inventory and data suppliers in a central platform.
So those are the players. There are other tools and acronyms to get into (SSP, DMP, etc.), but let’s keep it simple for now.
So how do the RTB Exchange players work together?
Here are the simple steps taken:
1. Publisher notifies Ad Exchange of inventory with some details on that inventory.
2. The Ad Exchange puts that inventory up for auction and in some cases provides an anonymous visitor identifier.
3. A multitude of various Demand Side Platforms bid on that inventory, often taking into account whether they have any cookie match data on that identified visitor.
NOTE: Your DSP must have a relationship/access to a particular ad network to bid on it. This is important in the context of the FBX discussion, because right now only a handful of DSPs have access to FBX. This means two things: 1) You need to make sure the DSP you or your agency is using has access to FBX; and 2) there’s a short-term opportunity of less competition for FBX inventory – less competition means cheaper inventory for now!
4. The highest bidder gets the right to place the ad.
The bidding for the visitor-level ad happens in milliseconds. And you we’ve already noted that you need access to that inventory. But what else is important?
Leveraging your available data to bid on that visitor is the most important step in not just winning the auction, but ensuring that you do so at the highest return possible.
Because the most informed DSPs have the ability to bid discriminate more effectively than the competition. This allows them to identify the audience(s) that they want to pay more/less for based on a tracked and expected return.
Using 1st-party and 3rd-party data parameters to identify high-value visitors and bid more aggressively to bring them back to the site is key. 1st-party data is the easy part. That’s the cookies you drop on a visitor, and the login-specific data you know about your user. But the next level of data is very important.
So where do you get that data? This is where we learn yet another term: Data exchanges. Data exchanges are online auction marketplaces where advertisers can acquire 3rd-party data to help them better identify, reach and bid discriminate for their ideal audience.
Finally, any solutions that can be used to enhance this visitor data will be key moving forward. This is why I’ll once again mention the ability to bid discriminately based on visitor behavior on your website. At IgnitionOne, we have the ability to track how engaged a visitor is with your site and the purchasing process. We use this as yet another layer of discrimination when it comes time to bid for that visitor. If they are identified via 1st-and 3rd-party data as the ideal demographic and audience type AND they have demonstrated a purchasing behavior on your site, then the IgnitionOne DSP has the ability to leverage all that data into an FBX bidding decision.
Facebook’s Exchange (FBX) offers marketers the ability to leverage all this data into bidding decisions for available Facebook ad inventory. This is truly exciting, especially for remarketing. Why?
This is data at work. Simply put: S/he who has the best application of data wins!
– Chris Knoch