Facebook moving to real time bidding model for its ad inventory – will increase efficiency for advertisers

By June 14, 2012 No Comments

Facebook yesterday told Bloomberg that they will introduce real time bidding for the ad inventory on their site in the coming weeks. This is a smart move and should result in a win-win of a better deal for advertisers and an increase in Facebook’s advertising rates. Here’s why:

  • Realtime bidding allows advertisers to target better – they bid for individual impressions allowing them to bid high for the impressions they really want and not waste money on the ones they don’t want
  • Creative can be optimised in real-time allowing time sensitive messages – e.g. show football related ads during the match
  • Campaigns can be optimised in real-time – e.g. if rates are suddenly low to reach a target demographic a campaign can be automatically scaled up in real-time, or is a certain set of targeting parameters suddenly start delivering high conversions the campaign can be re-oriented towards those paramters, again in real-time.

This third item is perhaps the most important, but it is the least talked about.

We at DFJ Esprit are big believers in the shift to real-time bidding because of the win-win it unlocks. The technology is hard though. Large amounts of data need to be processed very quickly for all the ad slots on Facebook at any given moment to be presented to adertisers with attendant targeting information, auctioned, and then filled with an ad before the rest of the page has loaded. Facebook is now joining Google, Yahoo, AOL and others in selling it’s inventory this way, and more will follow.

Disclosure: Our portfolio company StrikeAd is an enabler for the shift to realtime bidding on mobile.