Last week Facebook shuttered plans for adding a demand-side buying aspect to Atlas, its ad-serving and measurement platform, and in the process dealt banner ads a blow.
The social network said it made this decision after analysis on ads in LiveRail – a platform that Facebook is easing out of in favor of native and video ads – helped them identify where the most waste was coming from and remove over 75% of volume made up of low quality ads.
In a blog post titled "Building Towards Value with Atlas," Facebook Head of Ad Tech Dave Jakubowski said the analysis also shed light on what ad formats were actually driving any value for marketers, implying by default that banner ads did not.
"We were able to deliver ads to real people with unprecedented accuracy, but came up against many bad ads and fraud (like bots). While we were fortunately able to root out the bad actors and only buy quality ads, we were amazed by the volume of valueless inventory," he said. "Only two ad formats delivered significant value: native and video."
There was some industry push-back, including from Andrew Frank, a vice president with Gartner, who told CIO.com, "If the format were as worthless as Facebook suggests, then it would have been unlikely for the display ad market to have grown to around $7 billion. While we might all hope for a day when junky ads are a thing of the past, I fear they may be a product of human nature. One person's junk ad is another person's ticket to the body they always wanted."
Meanwhile, Victor Wong, CEO of PaperG, a display ad production and creative management company, told Marketing Dive that Facebook hasn't been a "serious player in the 'standard banner' format," and mentioned that ad serving on Atlas hit some early difficulties given Google DoubleClick's dominance. He added that the social giant does appear to remain committed to the standard banner ad for ad serving and tracking, but not in ad buying.
As Wong sees it, one short-term impact of Facebook’s move is it removes competition in the space that might have led to better pricing and more features.
"In the long-term, Facebook's decision really signifies a battle brewing over the future format of display advertising – is it the standard banner or is it a new format like Facebook's proprietary ad units?" he said.
The move allows Facebook to build on its strengths
More importantly, Wong explained, the move signals Facebook's success and strategy. While the social network has seen success in selling its own ad inventory and format, it has run into trouble with the still-dominant open web formats and inventories.
"Rather than fight a losing battle, Facebook is changing the battlefield and focusing on bringing its strengths, mainly audience data, to new battle fronts where it has a strong chance of winning, like emerging ad formats such as non-standard size ad units and native formats of display advertising," he said.
At the same time, Wong explained this decision could be harmful for marketers in the sense that it limits their reach and ability to leverage Facebook's ad stack to other channels. But that being said, Facebook has made moves recently, such as the addition of Canvas and Lift API, that prop marketers up and boost their ability to track and measure ads' impacts. These moves will ultimately help marketers get more out of the channels that Facebook is already strong in, namely native and video advertising.
Further, it can be seen as a push toward a better user experience – which has been a big topic of conversation this year given the rise of ad blocking tech and other realities.
"The shift is good to push the digital ad industry toward a better consumer experience," Wong said. "The last 15 years, ad design dictated web design, so if you wanted to make a website, you had to make sure it could fit the standard banner sizes. In the next 15 years, we'll see web design dictate ad design."
This will result in a better user experience because ads will be incorporated in the format of the content and design of the experience. "It won't be overnight and it won't be easy because it really means a proliferation of ad formats and sizes, but it will be better for everyone," he said.
Why banner ads aren’t going away just yet
Echoing Gartner's Frank's comments about the success of banner ads so far, Wong believes banner ads will continue to account for a large portion of online advertising spend.
"Display this year surpassed search in ad spend, in no small part, due to the humble banner ad which has been now elevated by programmatic targeting," he said.
But as customer experience continues to take on a central focus, the channel might have to adapt if it wants to stick around. Wong sees the future of the banner ad as moving toward more custom ad formats, but that the idea of image-plus-text advertising isn’t going away or declining anytime soon.
And who better than Facebook to lead the pack in refreshing the banner ad?
"Facebook does have a lot to teach the rest of the ad industry," Wong said. "In particular, its focus on fast ad load times, more targeted messages over flashy ads, and punishing advertisers who don't refresh their creatives. These are things that Facebook has nailed but the rest of the industry still has problems with."