What is Facebook Exchange and How It will Work?

Facebook is most popular social networking site, therefore, many

companies use Facebook Pages as a way to market. To this point in time,

many companies have had good success but are always looking for

ways to cherry pick the hottest prospects.

Now, this dream may have become a reality as the social media giant recently announced it will begin

rolling out Facebook Exchange. With Facebook Exchange, companies can market to their Fans using

marketing cookies. Companies have used marketing cookies for

sometime but what Facebook is proposing is to offer real-time

bidding based on the user’s activity online.

What is Facebook Exchange?

Facebook Exchange is the newest way that advertisers can reach their niche

audience, which could end up becoming the new way that advertisers get the

results they want. This feature will offer a new advertising service that will allow advertisers to retarget users and

bid in real-time based on a user’s recent browsing activity.

Specifically, advertisers will be able to reach users based on their browsing history elsewhere on the Web. What

this means is that marketers will be able to specifically advertise to people who have shown interest in their product or service based on their recent website

visits!

How exciting is this for marketers?

Facebook has stated that the advertisers will be able to bid on a

specific ad impression, which targets a user better than ads based on a possible interest to a group. The

advertising in this case shows ads to those that have shown interest in

something similar they had previously showed interest in.

The key feature of this new exchange system is the cookie is not dropped on the user’s computer unless he or she

has actually showed interest in buying. For instance, a user that

appeared to be booking travel plans on a specific site but did not actually

make the purchase could then be shown ads on Facebook that would be similar, which is retargeting the user.

Not only that, but they could be setting a new trend for specific

marketing to individuals that could in fact, have a huge impact on how

online marketing and advertisement is carried out.

How Does Facebook Exchange Work?

According to TechCrunch.com, here’s how Facebook Exchange works:

1. A user visits a travel site that’s hired a DSP rigged up with Facebook

Exchange2. A cookie is dropped on that user’s

computer, typically when they’ve shown purchase intent

3. If the user fails to make a purchase, or the advertiser wants to market to them more, the DSP contacts Facebook and gives them the user they wish to target’s anonymous User ID

4. The advertiser pre-loads creative for ads that would target that user

5. When the user visits Facebook it recognizes the cookie dropped by the DSP

6. The DSP is notified and allowed to make a real-time bid to show the user ads7. The DSPs with the highest bids get their highly-targeted ads shown to the user8. If the user disapproves of being shown the ad and ‘X’s it out, they’re shown a link to the DSP where they can opt out of future Facebook Exchange ads