Facebook Poised to Take Over Mobile Advertising in 2014

Facebook's ad exchange launch was the single most important event in the mobile marketing industry this year. It has already begun reshaping the way mobile marketing strategies are devised. Dubbed FBX, it allows advertisers to apply cookies to users' browsers as they surf the web, and then retarget those users with the ads once they return. J.P. Morgan analysts reckon ad revenue will eventually make up 60% of Facebook's total revenue, but for that to happen, FBX will need to become mobile-specific. Right now, the ad content on mobiles and PCs is different, with mobile ads still appearing as generic, non-targeted spots. FBX has allowed desktop browsing to become personalized, and the social network hopes to replicate that success on mobile devices.

Here's how it works:

• A user visits a travel site with a DSP rigged up to FBX
• A cookie is dropped on the user's computer, usually after they've shown an intent to purchase
• If the user does not purchase anything, the DSP contacts Facebook and gives them their User ID
• The advertiser pre-loads ad content that is relevant to that user
• When the user visits Facebook it recognizes the cookie dropped by the DSP
• The DSP is notified and allowed to make a real-time bid to target them with ads
• The highest bidder gets their ads shown to the user
• The user can choose to opt out of future FBX ads

For investors in the social network, FBX shows a willingness on Facebook's part to adopt more aggressive advertising tactics. They already lead the overall U.S. display advertising market, and FBX is bolstering that lead significantly.

The challenge in 2014 is to make FBX work as well on mobile devices as it has on desktops. Once this happens – as it undoubtedly will – the purse strings will begin to open for mobile marketing campaign managers right across the industry. As usual, Facebook is pioneering mobile marketing technology so that small businesses without the same financial clout can migrate their budgets to mobile without seeing it as a huge risk. As mobile marketing strategies catch up with the all-conquering pervasiveness of smartphone ownership, marketers are going to start seeing significant ROI from mobile marketing advertising. The industry may never be the same again.