Wednesday, October 08, 2014

Facebook starts offering its audience network tool to all advertisers and apps

Earlier this week, Facebook announced that they will start letting all advertisers and app developers use its Audience network tool against a fee. This means that any third-party app which host ads can now be powered by Facebook's targeting data. 

How does this work
Until now, an app developer who wanted to show ads in his app and earn money with it had two options. Option 1 was to employ a sales team and analyze its customer base and then create apps. This is a very expensive way and many apps can't use this option in its early days. Hence, option 2 was the preferred option so far, in which developers normally work with dependent ad networks who sell the ad inventory to the developer's app. These ad networks though have limited information about the identities of who they were reaching, and hence, the ads aren't targeted that well, don't resonate, and don't generate enough clicks or qualified leads to command high rates from advertisers.
This is where Facebook now comes in with its audience network. A developer is now able to install Facebook's SDK, which providers the developer immediately with an overview about each customer. The customer of the developer's app is not even required to be logged into Facebook by the time of using the new app, Facebook can work via phone ID to identify the person. Due to that, the developer will know immediately all about his customer and can adjust ads accordingly. The result is that this feature makes new apps way more attractive for advertisers and targeted advertising is possible from the very first app user onwards. 

Everyone can benefit
1) By offering this tool to all advertisers and app developers, Facebook positions itself very well. It is able to shift away from only offering ads on the Facebook page, which would eventually drive users away if the home wall is only full of ads. It additionally provides a good source for ads revenues and moves them even closer to Google.
2) The developer benefits because he is able to do offer targeted advertising from the very first customer on without the need of a sales team.
3) The customer of the new app benefits in the way that instead of being bombarded with mostly useless and ineffective ads, they might see ads which they are actually interested in.

Overall, I think Facebook did the right move in offering this tool now to everyone, as benefits are high for many stakeholders and potential downsides are very limited. 

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