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Facebook’s Billion Dollar Product You’ve Never Heard Of

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Well that was fast. In less than a year, advertising on Facebook mobile grew from nothing to more than a billion dollars annually, accounting for 30% of Facebook’s revenues in Q1 2013. Then there’s Facebook Exchange (FBX), the social network’s real time bidding product. Introduced last fall, FBX reached a billion daily impressions in just six months and shows no sign of slowing down. While Facebook mobile and FBX have garnered the attention of marketers and investors, another Facebook product is poised to claim (if it hasn’t already) the next billion–Custom Audiences.

Here are four reasons why.

1. A New Medium in Direct Relationship Marketing and Only Facebook Has it.

Custom Audiences takes the targeted approach of direct mail, email, and telemarketing but without being interruptive. Instead of emailing (often unwanted), calling (highly intrusive), or sending mail (slow and expensive) to an existing customer, Custom Audiences enables a marketer to communicate to an audience without interrupting the experience. It’s a subtle conversation between the brand and the customer.

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2. Reach, Simplicity, and Match Rate.

The concept behind Custom Audiences is not new. Other platforms have offered matching services that leverage first party data to enable direct digital marketing. What makes Facebook’s offering unique is its ease of use, massive reach, and high match rate. Testing Custom Audiences is simple–marketers can leverage a Preferred Marketing Developer (PMD) platform or Facebook’s Power Editor to load a list of hashed email addresses and launch a campaign in less than an hour. Because Custom Audiences is cross-platform, Marketers can reach up to the 1.1 billion users on either Facebook web or mobile. With match rates on Facebook as high as 80%, up to 2x the industry average, a larger portion of the intended audience is likely to hear a given message. Custom Audiences is not just another tactic, it’s a unique targeting medium that’s has no comparison in digital advertising.

3. Scale and Versatility.

Custom Audiences enhances existing Facebook functionality. To enable even more reach, Facebook released Custom Audience look-a-likes, which expands upon an existing audience by creating another Custom Audience of similar users. From there, advertisers can overlay additional targeting to further narrow in on their desired audience. For example, a home furnishings company could overlay their newsletter subscribers with a given interest (such as fans of Bed, Bath, and Beyond) and/or with offline data from Facebook’s recently launched Partner Categories (such as Recent Movers). From there, the marketer could tailor the messaging to fit the behavior and or interest of the audience specific to the brand. The mix and matching of combinations enable a marketer to narrow in on exactly their intended audience, unmatched by few marketing options in existence today.

Some advertisers may think all of this versatile targeting means low reach and low delivery. In the first half of 2013, Nanigans delivered over 35 billion Custom Audience powered impressions. Custom Audiences may be flexible, but it’s not narrow in its reach.

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4. The Product CMOs and CIOs Have Been Waiting For.

Custom Audiences aligns Chief Marketing Officers (CMOs) and Chief Information Officers (CIOs) toward improved customer loyalty. CIO’s who have invested billions in CRM systems that power the backbone of loyalty programs, daily drip emails, and promotional mailers are looking to draw more value from such investments. At the same time, marketers are hungry for more automation and granular targeting. Custom Audiences is the drawbridge. For example, an eCommerce company could announce a sale to inactive buyers; a Telecom company could offer a new phone when a customer’s two year mobile contract is about to expire; or an automotive company could message recent dealership visitors. Not only can these marketers measure online events, they can measure incrementality of such actions offline or holistically by setting up a holdout test between two custom audiences, and observing changes in behavior between the two groups. The use cases are endless, but the take away is simple—Custom Audiences allows integrated organizations to connect to its most important customers, wherever they are and however they interact with a brand.

Integration Necessary for Scale.

While getting started with a Custom Audience test requires nominal effort, leveraging Custom Audiences at scale requires additional investment. Custom Audiences need to be created and maintained as do the advertising campaigns that leverage them. A full solution that bridges CRM, advertising technology, and marketing process is critical for adoption. At Nanigans, we encourage all new customers to launch with Custom Audiences and work with our Ad Engine technology to streamline the process. The initial investment has paid off—Custom Audiences have delivered up to 5x ROI compared to other targeting techniques.

Marketers leveraging Custom Audiences are seeing high ROI coupled with high reach. While FBX and Facebook Mobile may have been the first to found the billion club, Custom Audiences should have or could have been there all along. Interested in scaling your Facebook Marketing? Contact Nanigans to get started.

John Marsland built Zynga’s early user acquisition team and marketing technology, and has been leveraging Facebook advertising at scale

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