October 22, 2013: Business Insider reports on the fact that Facebook has just granted Google access to the FBX (Facebook Ad Exchange) to purchase retargeted ads. In the past, Facebook’s refusal to share inventory and volume data with Google enabled smaller DSPs to pick up the business from Google/Doubleclick, and now that business is at risk.
Didit Senior Strategist Drew Mino comments: “It’s surprising that they would make a deal considering the competitive tension between the two, regarding Google+ and Facebook. It does make sense from a business perspective for both sides. Google is always looking for ways to expand their reach, especially in the remarketing sector. From Facebook’s side, it makes sense to add more players into their inventory to push the (currently lower than average) CPMs for the right rail ads. Both sides win with Google getting additional remarketing inventory and Facebook increasing their inventory sale margin. Currently performance for remarketing in the FBX is profitable mostly because of the lower cost. If CPMs become too inflated with a more saturated marketplace, advertisers may begin to shy away, based on the decline of return to investment ratio.”
This situation supports our prediction that, with the advent of Graph Search, Google and Facebook will move closer together, with Facebook and Bing drifting further apart. Is a Google-driven Graph Search in the cards? Read our article.
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