• by James Green , Op-Ed Contributor, October 24, 2013

News from Facebook just keeps on coming. Yet, for a company focused on connecting brands with consumers, you would think that Facebook could develop a name that was a bit more engaging than "website and mobile app custom audiences.” While this is certainly new, it’s more of an expansion of the "custom audiences" platform that Facebook has had for a few years now. Since there are a variety of articles that can explain how to use the custom audience feature, I’d like to explore why Facebook has decided to expand its audience targeting offering.

Broadly speaking, there are two ways to buy Facebook ads. First, directly (e.g., via "custom audiences") using all of the data that Facebook knows about its audience (age, gender, location, etc.). Second, indirectly via the Facebook Exchange (FBX) where Facebook will not share anything about who is seeing the ad, but where marketers can bring their own (mostly site and search-level) data to the table.

Partners who help advertisers with the direct sort of integration within Facebook are limited in the amount of markup they are allowed to charge.  If you are not transparent in the way you mark up the inventory, then Facebook will not let you be a partner. On the other hand, marketers and technology companies that bring their OWN data to FBX can mark it up as much as they like. In this scenario, Facebook has less control over the cost of its inventory because of the outside data that other companies are bringing to its platform.

Now enter the cumbersome "website and mobile app custom audiences" – I’m going to refer to this as “WAM CAD” because Facebook’s name is cumbersome. Facebook’s latest announcement basically asks marketers to place a little tag on their website and suddenly they have the ability to do site retargeting not through FBX, but directly through Facebook. This means that marketers can now bring some of their own data to bear and Facebook will allow you to use as much of it demographic and psychographic data as you like. And as if that offering is not enough, you now can buy every single type of creative available on Facebook - including mobile (which isn't available on FBX). In some ways, WAM CAD seems too good to be true, as it connects retargeting across devices and channels using a whole lot of data!

Site retargeting has been the engine behind the enormous growth in real-time bidding. So it makes sense that Facebook should hitch itself to the bandwagon. After all, a rising tide floats all boats. But site retargeting is increasingly a commoditized business. Every DSP known to man offers site retargeting. Additionally, Criteo has a highly anticipated IPO late this month and site retargeting is the company’s bread-and-butter. The question we should be asking is, will Facebook be competitive in the retargeting marketplace?

It's probably better to think of this as "the thin edge of the wedge.” This is the first time that Facebook has ever allowed the combination of external data and its own Facebook user data. Some of the partners will find ways to append Facebook data to their own so that they don't have to pay for it a second time and will buy the ad on FBX. Facebook will slowly open itself up so that you can combine your data with theirs. This will allow for more precise targeting, which will in turn keep advertisers from wasting fewer ad dollars.

Essentially, this move will make Facebook look more and more like an ad network. We all know that Facebook is the world’s most successful social media network, but did we realize that it is also now the world’s largest ad network? Expect more product offerings like this in the future.