Why Facebook's Next Big Step Will Be A Display Ad Network

Business Insider

There's an obvious, massive hole in Facebook's ad business right now: It lacks a display ad network, which would run standard format web ads on other publishers' web sites, targeted via a Facebook cookie which syncs with third-party advertiser cookies.

Think about it: Facebook just announced it was pursuing the equivalent network for mobile ads — where standard mobile ads are served on other people's apps and browsers via targeting data from Facebook.

It also has a real-time bidding (RTB) ad exchange in which ads can be generated inside Facebook that are synced with cookies carrying data from third-party advertisers. (The ads look like regular Facebook ads, but they're being served by non-Facebook advertisers rather than Facebook's direct clients.)

And, of course, it has its own native display and mobile ad offerings.

The only piece of the business Facebook isn't in is the RTB ad network business. Networks allow advertisers to target Facebook users with ads when they leave Facebook and go to read The New York Times or Huffington Post, etc.

Facebook currently gets about $2.16 billion in Web display advertising inside its own site, according to eMarketer. Google gets $2.31 from its networks.

But Facebook isn't serving any display advertising on the web outside of Facebook. That seems like a giant gap that could easily be filled.

I discussed this notion with Frank Addante, CEO of The Rubicon Project, recently. He was in town in part for a conference where he'd seen Facebook ad product director Gokul Rajaram speak. Rubicon's network is probably the biggest server of web display advertising aside from Google.

Addante declined to comment specifically on what he might know about Facebook's plans. But he sure was enthusiastic about the idea of Facebook getting into the RTB network business.

"If you look at the data Facebook has, it's pretty incredible," Addante says. Because users stay logged in to Facebook all day, they're prime audiences for advertisers who want to know who they're targeting as well as the interests of the people they're targeting.

"Big brand advertisers want premium content from traditional publications like USA Today, or luxury travel [titles]," Addante says. "If Facebook is able to leverage its data but do so on high-quality content, it's really very powerful."

Facebook declined to comment.



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