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TheStreet Open House

Facebook Feels the Love, Gets Boost From Ad Platforms

Stocks in this article: FBAAPLCRMGOOG

NEW YORK ( TheStreet) -- Facebook (FB) has not had the easiest of times since going public earlier this year, dashing investor hopes of a massive IPO pop. Since then, CEO Mark Zuckerberg and his team have faced ongoing questions about slowing growth and the company's ability to deliver long-term value.

Shares of the social networker have tumbled 40% since its offering in May, but have rallied recently thanks to a number of catalysts, including a new advertising platform.

The Menlo Park, Calif.-based company began testing the Facebook Ad Exchange, or FBX, during the second quarter of this year, letting marketers bid for ad impressions on the site. Touted as a way to deliver more relevant ads to users, FBX lets advertisers reach users based on their browsing history, a practice known as retargeting.

If a user, for example, visits an online retailer, FBX can generate a related ad when he next logs onto the social networker's site. Advertisers can then purchase these ads through what's been described as an automatic auction, known as real-time bidding (RTB).

"Facebook Exchange allows marketers to use their own real-time consumer insight data to reach an audience on Facebook," noted Scott Shapiro, a Facebook product marketing manager, in a recent blog posting.

The real-time aspect of FBX is key, giving sportswear companies the ability, for example, to market their wares during the World Cup final or the Super Bowl.

Now out of beta, FBX has garnered stellar reviews from a host of marketing specialists. Retargeting platform AdRoll, which was one of the earliest companies on the Facebook Exchange, said that its advertisers saw an average 16x return on investment thanks to FBX. AdRoll has already used the technology to launch campaigns for 60 advertisers, including home furnishing company Room & Board, social media dashboard HootSuite and camera specialist GoPro.

TellApart, which has been serving ads through FBX for three months, said that its clients have seen a 10x to 20x ROI.

In a blog posting, Zach Coelius, CEO of retargeting specialist Triggit, said that FBX has a four-time higher return on advertising spending compared to exchanges such as Google's (GOOG) AdWords.

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