Responsive Ads, Matching Markets, and Online Advertising
https://marketingland.com/responsive-ads-come-to-facebook-with-multiple-text-optimization-270013
Following a similar move by Google last year, Facebook has introduced responsive ads for their advertisers. What this means is advertisers will be able to submit multiple copies of the same ad and Facebook’s algorithms will display the copy deemed most effective. Different headlines, bodies and descriptions will be available and tailored to the individual viewing the spot. Reporting tools will allow companies to understand how different combinations of the headlines and bodies perform while further allowing them to tailor their ads for higher returns. By adopting this strategy pioneered by Google, Facebook is making themselves much more competitive against the search engine giant.
This directly impacts valuations for advertisers when selecting where they want to place an advertisement. Rather than having to bid for multiple spots and tailor ads to different demographics, advertisers will be able to use a single placement to advertise to different segments of their market. This may cause overall costs to go down as they will need to bid for less spots however this new method has certainly increased the value of individual ads. Conversely, an article about the Google’s response ads states their number of auctions will actually go up because ad groups will be bidding on a wider range of individual keywords to trigger their ads. By outsourcing the process of matching ad content to potential customers to Facebook’s algorithms, these companies will also be more likely to want to use Facebook to promote their products, further increasing their willingness to bid higher.