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The Third Channel

By: MarketingJul 14, 2017

There’s something happening at Facebook.  Almost under the radar it seems that they have established one of the strongest online advertising platforms available which is disrupting the established digital media buying landscape.  A simplistic view of digital media buying is that there are two very clear disciplines, ‘search’ and ‘display.’  Search is 100% platform traded whilst a growing portion of display is now starting to be platform traded via real time bidding (RTB).  This certainly seems very neat and Google have been in pole position to offer an over arching digital advertising management platform, the acquisition of Invite Media being the latest display addition to the existing, ubiquitous Adwords search platform.

However somewhere in the middle of this neatly bisected landscape, Facebook have started to build their own advertising empire, ignoring this equilibrium, and fast creating what would appear to be a completely new channel. In 2008 this quiet revolution started with the release of their self service buying interface for ASU’s (Facebook’s proprietary ad unit) and to complement this came a buying API on which they have allowed a limited number of third parties to build out campaign management tools.  At the start of this year, the walled garden approach started to pick up pace with the removal of all third party banner advertising and the under reported but very significant release of the Facebook conversion pixel.  Add to this an unwillingness to accept third party view tracking (at least for self service buyers) and the platform becomes a hybrid of the existing search and display models that are already prevalent but powered by Facebook using micro-targeted demographic and interest data.  Walled advertising gardens are the preserve of the audience or perhaps more crucially the data rich, and Facebook has both in abundance.

Rumour has it that their standard ‘banner’ CPM’s were incredibly poor with response rates for advertisers to match.  With the new system, advertisers now have the opportunity to tap in to the vast (and bettered only by Google) data treasure trove that Facebook holds on its users and create highly targeted campaigns.  Our experience of advertising on Facebook via their self serve platform is that it performs incredibly well for advertisers and justifies the ‘channel’ label with an emerging trend (in the UK at least) being Facebook specific pitches separated out from the rest of digital media buying.   Revenues are growing exponentially as well, up to $700m in 2009 and predicted to be over $1bn in 2010.  It’s safe to say that with this type of revenue and growth that banner advertising will not be returning to Facebook any time soon and they will push on with new ways to mine user data for advertising purposes all within the confines of Facebook.

So an interesting dynamic is emerging with Paid search, RTB traded display and now Facebook all having bespoke buying systems that are needed to operate them.   A couple of platform companies from both the search and display space backed up by large amounts of VC money are trying to solve these interoperability problems with the vision being a universal buying platform.  However, the further down the walled garden route Google and Facebook go, the more difficult it will be for this to become a reality as data is not portable between these environments.

From a media buyers perspective this is frustrating, but then it’s only from this side of the fence that interoperability make sense.  After all, would you share your data, if you were sitting on the monopolisitic advertising goldmine that both Google and Facebook are or would you keep it behind closed doors? It’s a smart play and the early signs are that Facebook could well be here to stay as a channel in its own right.

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