Facebook Ads API and Exchange: Closing In On Conversion
Ads, ads, they are everywhere! I first started using Facebook in 2008, and I don’t remember as many ads on my home page as I see now. Well why? First, many conglomerates like Google and Yahoo, have learned to capitalize their profits on ads in bidding for slots, especially Facebook. Second, the usage of data analytics and metadata tracking of consumers behaviors has aided in predicability of conversion.
Looking at Google’s algorithm of PageRank provides information through the processing of ranking links based on the normalized score of retrieval on relevance of a key phrase or word (Newman ‘13). This similarly plays into the idea of web services continuing to curate an atmosphere of most “relevance”, where ads are slotted based on likelihood of interaction based on user’s preference and history tracking through cookies and other metadata. Yet interestingly enough “organic search” retargeting on ads does not seem to be as successful in conversion to sales as the native Facebook Ads API which captures original search and “re-markets” ( Nanigan’s ‘12).
Photo credit to Nanigans
Facebook Exchange (FBX) which is is the sidebar on the social networking’s desktop version, is visible to the consumer and is the target place of insertion of ads based on user’s online behavior. Companies use impression-level bidding on Facebook’s standard ad inventory, through metadata, the intent of visitors on a company’s site allow for advertisers to capitalize on that action and maximize revenue through impressions. Though in the search capability Google has “I’m feeling lucky”, which directly takes you to the first query based on your keyword bypassing the results page, it doesn’t follow the dynamic of user preference, it relies solely on PageRank as its subsistence ( Newman ‘13).
FBX focuses on the market entry concept of what we spoke of in class on the realm that valuations are not just based on price per click (PPC) but relevance of past queries to parallel if the customer has visited the company’s site previously. This added measure disrupts the assumption made in matching markets which states that the higher ranking of slots have a larger click through rate than those who are lower ranking on the page because it’s not specific to the content in the ad. The entire premise of FBX is that ad specificity increases click through rates and in turn sales because of “re-marketing” company’s websites/services, that the user had already clicked on or engaged with in the past rather than ranking of slots.
In an online conversion focused study by Nanagins, a marketing e-commerce platform, found that persons who entered “FBX re-marketing pools after first viewing a standard Facebook ad purchased 89% more in sales revenue” than those who entered FBX re-marketing pools from organic search or other channels ( Scott ‘12). The research concluded that viewing FBX buys through the native Facebook Ads API drove 39% additional customers into FBX re-marketing pools, which proves that securing potential customers who have already shown intent increases the probability of conversion than those who have never visited the advertiser’s website (Nanigans’ 12). Demand-side platforms (DSPs) help advertisers monetize on this action with display inventory outside of Facebook, but with FBX success, more are leaning in this mode of securing revenue in sales. Interestingly, Facebook just announced their “dynamic product ads”, which is going to give DSPs proprietary user information in aid in targeting consumers, which deems to increase numbers of conversion even more (Kim ‘15). The rise of the adaptive algorithms to track user history is allowing advertisers to greatly capitalize on consumers who show initial interest in products and secure the conversion by “re-marketing”, seems like Facebook’s Dynamic Product ads are only expanding the details of gathered metadata.
http://smallbiztrends.com/2015/02/dynamic-facebook-product-ads.html
https://developers.facebook.com/docs/marketing-api/quickstart
http://www.nanigans.com/blog/fb/usu/why-advertisers-cant-leverage-fbx-alone-study/
http://www.shubhro.com/2015/01/20/im-feeling-lucky/
http://smallbiztrends.com/2015/02/dynamic-facebook-product-ads.html