Something new is afoot at the now public Facebook…real-time ad auctions called “Facebook Exchange.”  Social marketers could be seeing it in as soon as a couple of weeks and using it to attain online usage behavior that will make Facebook ads more precisely targeted and relevant than ever.  And, as we’re all learning, knowing your fan intimately is a key ingredient in moving them from liking to loving your brand.

Facebook Exchange will let social marketers zero in their ad content on specific types of users by assessing their online browsing history.  If that sounds a little familiar, you may have heard of a company called Google and a thing called AdWords.

Here, in the simplest way we can describe it, is how Google ad auctions work.  They too, are designed to help advertisers surface more relevant ads to users who have conducted a search on Google.  The underlying principle is that users want relevant ads, advertisers don’t want to waste money on misguided ads, and Google wants both users and advertisers to be real happy so they’ll come back again and again.

The auction determines what ads will appear after a user does a search, the ad’s position on the page, and the Cost Per Click (CPC) to the advertiser.  Your maximum CPC bid and your ad’s Quality Score affect how much you’ll pay for an ad click.  Quality Score is important.  That’s how “good” your ad is.  It’s determined by 3 things:

•             Click-through Rate (CTR).  When your ad shows up, is it getting clicked?
•             Relevancy.  Are the keywords and search terms appropriate?
•             Landing Page Quality.  Does your ad drive them to a real and vibrant site?

Next, your Ad Rank is calculated.  That’s the amount you’ve bid multiplied by your ad’s Quality Score.  Cost Per Click (CPC) is determined by the Ad Rank of the next bidder below you divided by your Quality Score.  So what you want to pay attention to here is the Quality Score.  It affect everything from how much you’ll pay to how useful your ad will be to those who see it.  And remember, you drive Quality Score up with relevant content that leads to genuine, useful destinations.  Got it?

It must work.  IDC says real-time bidding will account for around $5.08 billion, or 27%, of what’s spent on online display ads in the US in 2015.  Last year it made up 9.8%, so you can see which direction that’s going.

Now back to Facebook Exchange.  Spots are going to be sold through 3rd-party ad partners.  The thinking is that since Facebook brought in $3.15 billion from advertising last year, making sure that inventory on the right side of the page is even more tightly and intimately targeted to users will only make Facebook ads more affective and attractive.

But here’s where things have really changed.  Prior to Facebook Exchange, users were targeted based on their Facebook profiles and what Pages they “Liked.”  And you’ll still be able to buy based on those things, but it won’t be part of the Exchange.  The Exchange reaches farther, placing cookies on the Internet browsers of Facebook users so marketers can see what they’ve been looking for across the whole web.  Users can’t opt out of this, though there are ways outside of Facebook to block cookies…if you really want to get ads that aren’t relevant to you.

Otherwise, if they allow some intimacy, users will start seeing ads from you on the right side of Facebook that reflect a highly attentive knowledge of what they currently care about and are looking for.