Initial Trials Show Facebook Exchange Retargeted Ads Deliver Massive Return On Investment, Up To 16X

Facebook began allowing partners in its Exchange cookie-based real-time bidding retargeted ads program to share results this morning, and data from AdRoll, Triggit, and TellApart show the ads earn businesses up to 16X what they spend. Facebook revealed the new ad format in June, and by August we were already hearing the ads were performing very well, but now the data shows Facebook Exchange (FBX) ads may be cheaper, get higher click through rates, and have higher post-click conversion rates than retargeted ads on other exchanges, including Google’s AdX.

By increasing relevance and quality of the ads for users and earning advertisers more money, FBX could grow to be a huge revenue generator for Facebook — a company scrambling to prove it will continue earning more and more in the future.

Facebook Exchange ads allow businesses to retarget visitors to their websites when they next visit Facebook. For example, someone who checks out a a pair of shoes on a clothing site but doesn’t end up buying could see ads encouraging them to buy those same shoes next time they’re on Facebook. Retargeting lets businesses reach potential customers who’ve shown purchase intent and have a much higher likelihood of conversion. This means advertisers may be willing to pay much higher prices than for standard ads.

Retargeting has long been used around the web by ad providers like Google, but is new to Facebook. Now FBX ads are running in the right sidebar of Facebook’s desktop website, mixed in with ads targeted by biographical information and interactions with brands by a viewer or their friends.

Here’s a breakdown of the data from three companies in the Facebook Exchange program:

  • AdRoll noted 16X return on investment in Facebook Exchange ads for its clients
  • TellApart clients averaged a click through rate of 6.65% on Facebook Exchange ads, compared to 6.41% on Google’s AdX
  • Triggit’s Facebook Exchange Ads saw 4X higher return on assets (or profit), 2.2X higher post-click conversion rates, and 6.5X less cost per click-through order than on traditional ad exchanges

This is very good news for Facebook. It was hoping to prove that retargeted ads work on Facebook, that users weren’t alarmed by the mor personalized targeting, and that they earned money for advertisers. So far, that’s been the conclusion.

These results are based on limited early trials so they aren’t definitive. Facebook will need to show the ads work across verticals for numerous ad exchanges before advertisers will start gravitating to them in mass. Also, one problem is that FBX ads are only showing on the desktop site right now, and Facebook’s user base is increasingly accessing the service from mobile.

But ad industry contacts tell me many businesses have large budgets devoted to retargeted ads, and if Facebook can tap into those, it may be able to significantly increase its revenues. If they can please Wall Street without pissing off users, you might see a lot more of your activity around the web following you to Facebook in the form of FBX ads.