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The social-ad network?

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The social-ad network?

2012 has been a bumpy year for Facebook. They hit 1 billion users, paid the same amount of dollars for Instagram, and made billions of dollars through their IPO. But the IPO proved to be a damp squib, with shares currently trading 40% below their opening price, and the mass movement of consumers to mobile is hitting their revenues due to the lower CPM on mobile formats. 2013 is likely to see a concerted effort by Facebook to redress these issues, likely with a move to off-platform advertising.

Facebook has built a huge audience, and equally huge data sets around these users. To date, it has tried to change the accepted ad model, with a walled garden approach, underpinned by non-traditional formats that try to build engagement through social context (surfacing peer recommendation in its formats through likes and shares). As its revenue growth starts to slow we predict that Facebook will try to leverage that data by building a data-driven platform for 3rd party publishers: AdSense with likes so to speak.

The first signs of this are already apparent: Facebook Exchange, launched in June, allows DSPs to retarget consumers who have been cookied on 3rd party sites, on Facebook. Already estimates suggest this could make up 20% of Facebook’s on-platform ads in 2013. Also in June, Facebook started powering ads on Zynga.com. Then, in September, Facebook announced that it was going to start using its on-site data to target ads on 3rd party mobile apps.

All three of these developments show that Facebook is getting increasingly serious about monetising the huge amount of data it has on what users do both on, and off of Facebook (particularly through Social Plugins & the Open Graph API) . Not only does this open up important new revenue opportunities for Facebook, it also means that they could start to take larger chunks of performance budgets.

With this in mind, it’s obvious why Facebook is likely to take the next step and launch its own ad-network. It’s already seen by many publishers as less of a threat than Google, so it seems certain that many of these publishers would love to swap AdSense for something provided by one of its biggest competitors.

A socially-powered ad-network would be an almost entirely new entity. Facebook already sometimes struggle to explain the benefit of its products to marketers, so they would have to ensure the same didn’t happen again. But by layering social on top of direct response, it’s likely that many advertisers would have less trouble spotting the opportunities.

It would also of course help them do well with advertisers who might be moving away from a Facebook-centric strategy (i.e. those looking to build their own communities) as well as in sectors that might currently struggle to see a real benefit from its existing offering (finance, etc…) What’s for sure is that it would throw an almighty cat amongst the pigeons in the increasingly competitive digital space.

Whilst there’s no guarantee that Facebook will launch an ad-network, all the signs suggest they will, and it will undoubtedly have massive implications. Brands should therefore start planning for a time when social and DR collide, and Facebook starts to play a bigger role outside of branding, even for clients with no social media strategy.

Ciaran Norris is chief digital officer for MindShare.

 

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