Ad tech ate the world, but Facebook is eating ad tech, at least from the perspective of the industry that was born before the social network began dominating internet advertising.
Last week alone, Facebook shut down its last pure programmatic ad exchange FBX, put the final nail in the LiveRail platform, and expanded its Facebook Audience Network, which is a closed platform. These changes, dripped out over months, have put a scare in the ad tech ecosystem of intermediaries that often bid on ad impressions in open exchanges.
“It’s clear that Facebook is going for a totally walled-garden strategy and abandoning all the real-time exchanges,” said Ari Paparo, CEO of ad tech company Beeswax.
Facebook also made changes to the Facebook Audience Network, which sells ads on apps and websites outside the social network but using Facebook user data. Now, Facebook will serve ads on outside properties to users who aren’t even members of the social network.
As the dominant force in digital media right now, Facebook can afford to flex its muscles. Most of what Facebook is doing with its advertising is a break from how internet ad serving was done on desktop, which, to be fair, evolved as a messy system, but also one open to new companies.
“We’ve seen the air get sucked out of ad tech. Programmatic is still central for any big marketer, but they want programmatic that’s targeted, people-based, and those are all promises ad tech wasn’t built to deliver. Facebook is leading with people-based advertising, and now it’s building scale,” said David Skinner, vp of strategic alliances at Merkle.
Facebook’s ad tech strategy stands in contrast to what Google has done to build a more open ecosystem. The rivalry between these dominant internet ad giants is shaping up to be today’s version of Microsoft versus Apple of the 1990s. In this case, Facebook is Apple with its closed ecosystem, and Google, ironically, is Microsoft with near monopolistic control over all key aspects.
Instead of the open exchanges that third parties access to bid on ad inventory, Facebook is concentrating on its API — application programming interface — a fortress that it controls. Facebook is the gatekeeper of what marketing partners access its API.
With LiveRail, it is only catering to preferred publishers and approved advertisers with a private marketplace approach, and it is nudging longtime publisher clients like Hulu and A&E Networks to just put their ad inventory up for sale through the Facebook Audience Network.
Facebook is taking this “walled garden” approach because it’s protective of user data, according to Tom Affinito, vp of product marketing at Kenshoo. “A lot of functionality from FBX is available in more robust ways already inside Facebook.”
Facebook declined comment for this story.
Facebook has deep insights into billions of unique internet users and can project lookalike models to figure out the rest for highly targeted advertising and accurate measurements of ads and their impact on users. This could provide the clarity that many marketers have repeatedly asked for from ad tech. But one man’s mess is another’s business model.
“It’s starting to really fuck up some major aspects of revenue streams for constituents on either side, ad networks and publishers,” said one ad tech source.
Not all is lost, because even if Facebook and Google control half the internet ad market, there will always be room for independent players. “Marketers demand choice over where to spend their money. If you’re a brand manager, you don’t spend it all with Google and Facebook and say you’re done,” Skinner said.
‘Not the future’: European publishers remain steadfast in blocking alternative IDs to third-party cookies
Some European publishers believe alternatives to the third-party cookies, probabilistic or deterministic, will do more harm than good to their ads businesses.
Media Briefing: Why Leaf Group spun off its media arm into a standalone company
World of Good's newly appointed CEO Lindsey Abramo spoke with Digiday about her plans to lean into experiential and embrace niche vs. scale.
Dentsu’s latest ad report shows slowed growth, driven mostly by inflation
The good news in Dentsu's ad forecast is that there's still growth. The bad news: most of the growth is the result of inflation, while real ad pricing actually dropped a bit.
SponsoredWhat the measurement and currency discussion really means to TV advertisers
Ali Mack, head of TV and agency, Experian Major streaming video providers have recently made headlines by adopting new currencies for ad measurement, threatening Nielsen’s long-standing TV ratings monopoly. NBCUniversal, for example, has certified iSpot and VideoAmp as currencies for advanced audiences and formed the Joint Industry Committee with Paramount, TelevisaUnivision and Warner Bros. Discovery. […]
How chef influencer Tue Nguyen works with the BuzzFeed Creator Network
BuzzFeed's Creator Network has been valuable from an audience and production education standpoint, but Nguyen still drives most of her business on her own.
Dentsu’s new Web3 readiness tool shines light on the tech’s potential to complement AI
Dentsu's Innovation Initiative is launching a web3 readiness index next month — at a time when the industry is obsessed with AI. Could the two technologies actually make a good pair?