It’s an unlikely partnership but Facebook and Google will be working together. It was announced recently that Google’s DoubleClick will now have access to Facebook’s Ad Exchange (FBX) for retargeted advertisements on Facebook.
What exactly does this mean?
In 2007, Google announced its purchase of DoubleClick for 3.1 billion dollars. DoubleClick provides a popular demand side platform for marketers to purchase online display advertising through a real-time bidding platform. Since its acquisition by Google, DoubleClick has established itself as a one-stop shop for marketers to purchase advertising from a number of web publishers and ad exchanges all under one roof. Facebook has been a significant gap in Doubleclick’s offering to marketers until now.
So now DoubleClick users will have access to publish display advertising through Facebook’s Ad Exchange, which allows marketers to retarget advertising to customers on Facebook who previously interacted with a web property elsewhere on the web.
Why is it a surprise that they are working together?
This is an unlikely partnership as it would seem that Facebook and Google are direct competitors in the online display advertising market. Over the years, Facebook display advertising revenue steadily rose and guided Facebook to the top spot for revenue earners in display advertising, until 2012 when Google took over the spot and is expected to come up top again when they announce their 2013 revenues in the New Year.
Advertising competition is not the only source of tension between the two companies, Google’s rival social network, Google +, is in direct odds with Facebook’s primary user based service.
And to make matters even more contentious, Google has recently announced their new advertising features. You may have notice the notifications from Google to re-read their amended Terms of Service in the past weeks that have gone into effect as of Nov 11). All of this is because Google will rollout social recommendations in their advertising. This means that users on Google+ may be featured alongside ads, the Profile pictures of a user serving as a personal recommendation to searchers in their respective networks.
This social element seems to be an attempt to rival the social elements of Facebook’s advertising options, where users’ activities (Likes, Shares, Comments) on Newsfeed advertising have shown the distinct power of connecting advertising with personal engagement and influence.
Nonetheless, these two rivals have come to some sort of agreement that has brought Google’s DoubleClick into the fold of Facebook’s retargeting display ad exchange. It’s not quite clear what this could mean for either of the two new-found partners, but there are some strong numbers that show where things may be headed.
Facebook Exchange and Mobile
Having launched FBX exchange a little over a year ago, Facebook has not yet brought the exchange to their mobile platform. However, Facebook did launch an alternative retargeting method for mobile with its new “custom audience” feature. This allows advertisers to target advertising to a list of customers based upon emails, phone numbers, or their unique and anonymous Facebook ID number.
The custom audience targeting for mobile provides some retargeting power for Facebook marketers, but it is a separate feature from FBX. This introduction of feature may be the stepping stone into mobile retargeting for Facebook. As of now, they see these features working in a complimentary fashion.
By looking at the third quarter results of this year, it’s clear that mobile advertising is the next challenge for companies to tackle. Google announced $ 14.89 billion in revenue, but noted some difficulties with adapting to mobile advertising markets. While Facebook, on the other hand has skyrocketed their numbers in the mobile sector. Facebook’s third quarter saw $ 1.8 billion in advertising revenue with their mobile advertising accounted for 49% percent of the total (compared to 14% of total revenue in the third quarter of 2012).
Along with Facebook’s daily mobile users reaching just over half a billion, advertising on Facebook’s mobile apps will bring marketers in touch with an extremely engaged audience. With this significant number of engaged mobile users, there is much to gain for advertisers and Google and Facebook for retargeting ads on mobile devices.
DoubleClick’s Competition on Facebook Exchange
FBX exchange is still a relatively new ad feature for Facebook, having launched in beta a little over a year ago. At the inception of its launch, and to this date, the number of DSP providers like DoubleClick was limited to a small group of relatively smaller companies. This has allowed for a significant growth in small players who may not had been able to compete with an advertising giant like Google, had they been also provided access to the ad exchange from the get-go. With the exchange having survived without Google thus far, it has established itself as a viable platform that has been a success for other advertisers outside Google’s DoubleClick platform. The inclusion of DoubleClick could be a shift towards larger clients bringing their retargeting advertising to Facebook and a sign that the exchange has been a success so far and is ready to expand its offering.
It’s clear that both are to gain from this partnership. Facebook is opening up to Google, providing access to its platform for advertising, while gaining a sizeable pool of marketers using, and paying for ads, through the Double Click demand side platform. Google will gain by providing their large share of DoubleClick users, as well as the cut of ad sales that marketers purchase through the bid manager. How successful this partnership will be for either company may be unclear, the real winners of this partnership will be the marketers using Facebook as an advertising platform.