Do you remember Facebook without ads, or rather, advertising without Facebook?
A digital landscape without targeted advertising is a faint memory, isn’t it?
Online advertising used to consist of banner ads that reached large demographics. These ads were largely ineffective, but they didn’t stir up much controversy.
Today’s targeted advertising, on the other hand, has made the public and lawmakers question what advertising should look like in the age of social media.
Concerns about US election interference, the Cambridge Analytica scandal and even quirkily precise ads can make Facebook and its partners feel too close for comfort.
These problems have led to rising public pressure and new legislation enforcing data transparency.
Facebook warns of ‘headwinds’ that will reshape advertising as we know it.
Facebook: A pioneer in targeted advertising
Facebook’s ad tech was one of the first solutions to enable targeted advertising.
In 2006, Facebook and Microsoft announced a deal that would establish Microsoft’s adCenter as the distributor of Facebook’s then 9 million users. These banners were among the first of their kind to start tracking user behavior and effectiveness.
Since then, advertising on the platform has evolved in unprecedented ways. Facebook and its advertisers have gone through the rise and fall of a number of advertising strategies.
Some stages the platform went through include:
- The release and removal of banner ads
- The release of Pages
- The release and removal of Beacon
- Sponsored Stories
- The release and fairly recent removal of Partner Categories
Facebook remains a leader in providing highly targeted ads. Programmatic ads are distributed based on: personal preferences, location, interests, income level and even mood.
There are a number of ways advertisers can target their audience within the platform. While Facebook paints a plain picture of their advertising model, the process isn’t so simple.
Marketers can mix and match a number of very personal categories to place their ads in front of potential customers, making targeting options almost endless.
‘Headwinds’ are expected to hit this year, says Facebook
Just like Facebook has gone through a series of stages to make advertising more effective for advertisers and more relevant for consumers, it will continue to face changes as it navigates growing concerns surrounding privacy.
The thing is, though, that programmatic ads have already come and aren’t going anywhere.
MediaRadar research found that 85% of companies that advertised online in 2019 ran at least part of their ad buys programmatically. In the same year, 37% of all online ad spend was made via programmatic ad placements.
It’s unlikely that programmatic ads will disappear, but Facebook has made changes (like removing Partner Categories) to protect data, or to at least reestablish trust with users. It is also releasing a feature so that users can see and control their data in new ways.
Headwinds may be a relative term, coming from the advertising giant. Facebook exceeded Wall Street’s revenue estimates, with $70B ad revenue for the year. Its Annual Revenue Per User (ARPU) topped $41 In North America, which is hard to compete with for almost any other publisher.
It is also likely to benefit from Google’s recent change in its policy towards cookies. Facebook sits on a mountain of first-party data, unlike other publishers who rely on cookies.
Perhaps headwinds are coming for advertisers and publishers, but Facebook is not showing any signs of slowing down.