When Facebook went public in May at the cost of $38/share, but it has since struggled to get anywhere close to that amount, falling at one point below $18. Analysts and investors have been down on the social-networking site, saying the new more-mobile world is going to make it less relevant. Mark Zuckerberg admitted that mobile needs to be more of a focus during his first post-IPO public remarks, at TechCrunch Disrupt. The stock price has made its way back into the low twenties, partially due to its founder/CEO's remarks over marketing missteps — and also due to some much-needed good news for the company.
According to partners using Facebook’s ad network, the company is doing better than Google in getting its users to click on advertising based on browsing.
“Facebook Exchange, or FBX, generates as much as four times the return on ad dollars than other real-time bidding systems, said Triggit Inc., which makes software tools to help Facebook deliver the ads,” Bloomberg reports. “Another partner, AdRoll, said advertisers used to getting $10 for every $1 they spend are making $16 for every dollar spent on FBX.”
The official launch of Facebook Exchange on Sept. 13 sent its share price soaring. The ads come up based on what a consumer has been looking for on the web. So if someone has been searching for shoes online, when he or she goes onto Facebook, shoe advertisements will be served up.
FBX has been in beta until now, making noise back in June with the appearance of its sponsored stories ad unit on Zynga. Now it's live and public, FBX should help boost this revenue and compete with the likes of Google and Yahoo!, Facebook debuted real-time bidding (which allows ads to be served as soon as a person’s profile matches up with the product being marketed) in June, Bloomberg notes.
“As more advertisers start to see the results we’ve been seeing, they will be willing to spend more money on Facebook,” Zach Coelius, CEO of San Francisco-based Triggit, told Bloomberg. Brian Wieser, an analyst at Pivotal Research Group, toldBloomberg TV that Facebook is poised to bring in as much as $1 billion in sales next year.
The sweet spot for Facebook is that it has one of the most detailed and massive databases of consumer behavior on the globe.
From all the "likes" consumers provide all over the web to the check-ins from airports and restaurants and all the other information we provide to the company, Facebook's social graph has yet to be leveraged (thanks to privacy concerns) for marketers.
With FBX, real-time bidding is a step in that direction, and a precursor to building its network so it can serve ads to its users in different contexts — including on the wider web and not just within its own walls — rather than solely cluttering up its own real estate, as Clickz.com notes.
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