Is FBX Creating Performance-Enhancing Products?

Since its release in 2012, there have been continuous industry updates and hype around Facebook Exchange (FBX), the site retargeting program introduced for Facebook ad inventory. Much of the early speculation and reports compared FBX performance against both Facebook and general display. Over time, product improvements and attribution functionality have influenced FBX’s valuation. As such, it is necessary for marketers and advertisers alike to understand how performance has evolved and is defined so as to adequately determine its value and impact on the advertising ecosystem.

Rewinding to review FBX ads at the time of their launch, inventory was limited to standard Marketplace ads, which generally have the lowest performance on Facebook. This meant that ads could only show on the right hand side of the page and creative was limited to the 110×80 image and text. In May, Facebook kicked things up a notch by making retargeted Page Post Link Ads available on the newsfeed. Early reports have shown that this change has positively impacted FBX performance. An AdRoll study suggests that CTR climbed 21x higher and lowered CPCs by 79% when compared to standard retargeting. Opening the door to Page Posts also allowed FBX to target the highly engaging mobile inventory. More recently, improvement in FBX performance has been a result of introducing Dynamic Creative – fully customized images and messages served based on a user’s unique browsing behavior. With intent already established, the promise of dynamic creative lies in it providing heightened relevancy for end consumers. Ad engine, Nanigans, reports in a case study that dynamic creative through FBX resulted in 5.1x higher ROI, 43% lower CPCs and 66% lower CPAs. Consequently, this puts FBX in contention with SEM and other direct response performance campaigns.

The definition of performance, however, is not unanimous. Each advertiser and campaign will value varying metrics as a benchmark for success. Arguably, conversions are among the top methods for measuring FBX campaigns. As such, it’s important to understand the process by which conversions are attributed. Facebook has created an algorithm that allows for ads to continually rotate on static pages. As a result, the ads on the right side of Facebook refresh and deliver superfluous impressions if the user doesn’t reload or change pages. Keeping ads refreshed at times when a user is scrolling the News Feed or has left their browser open increases the likelihood that Facebook will get credit for post impression conversions. The act of rotating ads may therefore deliver above average conversion rates for FBX campaigns.

As we think about the bigger picture, the concern is not that FBX’s value is misrepresented, but rather that the rest of the industry might be encouraged to move toward this method of ad serving. Using last-click or last-impression alone to measure and optimize campaigns doesn’t provide a complete understanding in today’s complex marketing ecosystem. Moving between varying models of attribution including multi-channel and last click is important in understanding the true value of any given ad or campaign.

Within only a year of its launch, FBX has seen many iterations and product developments. As it continues to mature, how we measure performance will inevitably change. Technology’s growing ability to track and report on virtually every touch-point in the consumer journey will continue to shape the role of FBX. Therefore, it’s important for marketers to maintain a sophisticated understanding of FBX products and analytics so that they can expertly evaluate its performance as it relates to their broader digital strategy.