The Facebook RTB Opportunity

Facebook announced last week the launch of Facebook Exchange, a complete online advertising platform to buy online display inventory in real time (RTB). According to eMarketer, the social network leads the overall U.S. display ad market, growing their revenue to 16.8% of the U.S. display advertising market, up from 14% in 2011, and 11.5% in 2010. By comparison, Google's share of U.S. display ad revenue should reach 16.5% in 2012, up from 13.8% in 2011 and 12.1% in 2010, again according to eMarketer. The research firm estimates the overall U.S. display advertising market, including spending on ads bought through real-time bidding systems, will reach $15.39 billion this year, up from $12.4 billion in 2011.

For Facebook, the entrance into the RTB display market could represent the growth in revenues the company needs to beat the expectations raised by their IPO. Facebook needs to increase their revenues to deliver a much better profit margin and their current social advertising platform hasn't been successful enough. So they need to move forward and capitalize on their huge online ad inventory with proven technologies that are delivering better eCPMs or RPMs. Facebook will open themselves up to new display advertisers and agencies through their Facebook Exchange and will be able to grow the number of customers through programmatic buying. It is a huge opportunity for Facebook and a clever strategic move. If their results are not good enough, maybe Facebook will finally think about monetizing their online display inventory, partnering with Google. We will see the numbers.

For marketers, DSPs and agencies this is also an important announcement. Suddenly in the online display advertising market, trillions of well classified impressions are available to buy. By opening their online inventory to programmatic buying platforms (DSPs), Facebook Exchange will enable brands to benefit from the efficiency and effectiveness of impression-level decisioning. It reduces manual campaign management, improving the cost side of campaign execution. It tightly targets messages to a brand’s desired audience at scale. Facebook Exchange is a huge opportunity for marketers, DSPs and agencies, who should see their business grow in terms of volume and scale.

For the whole online advertising industry the Facebook Exchange announcement is very important. The entire online advertising business value chain will be impacted by this new player. Every single company along the value chain will see how its business grows in terms of volume and scale. All the technologies that have been developed during the last five years around RTB will have the opportunity to finally demonstrate that they are as profitable as search advertising. Facebook Exchange is a huge opportunity for the online display advertising industry to become more important in terms of revenues than the search advertising industry.

But who stands to lose after the Facebook Exchange announcement? The first impact will be that the offer of online display inventory will increase dramatically, so prices will go down, even if RTB technologies try to keep them at the same level. Online editors will see how, once again, trillions of online impressions will be available from outside their online properties, pushing eCPM or RPM prices down. This time though they will come from the world's biggest online property, not from millions of unknown online pages through Ad Networks. If Facebook Exchange is a success, online media players will suffer from it. Might they be able to create a new opportunity?

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