Facebook spoke about the importance of ad tech in its recent earnings call with Sheryl Sandberg, Facebook, COO, telling investors it is vitally important to the company's 'mobile first' future, although the subsequent investment increase caused its share price to drop, despite continuing growth.  

This comes as Facebook prepares to make its debut on ExchangeWire's ATS New York and ATS Paris stages, where Lori Goode, Facebook, head of Atlas product marketing, and François-Xavier Pierrel, Facebook, Atlas, regional manager Southern Europe, will take to the stage to talk about its recent Atlas ad server launch.

The social networking giant yesterday (28 October) reported revenues of $3.2bn for the third quarter, an increase of 59% year-on-year, with mobile accounting for 66% of total revenues.

Advertising revenues increased 63% year-on-year during the period, and its daily active user (DAU) numbers hitting 864m, with mobile DAUs numbering 703 million, during the period.

However, the company projected slowing revenues for the next quarter – up 40%-47% above the year-ago period indicating revenues of up to $3.bn – which was short of earlier analyst expectations, with overheads also set to increase.

This triggered a sell-off in the company's shares with its stock prices falling by as much as 10% in the immediate period immediately after the announcement. But during Facebook's earnings call with investors, company representatives pointed out on multiple occasions the importance that investing in ad tech would play in its near and long terms future.

Facebook's ad tech future

Mark Zuckerberg, Facebook, CEO, laid out a three, five and ten year plan for the company, including continuing to grow its current users base (currently at 1.35 billion), investing in more products such as Oculus Rift, video services and WhatsApp, as well as further investments in ad tech.

Meanwhile David Wehner, Facebook, CFO, hinted towards future investments to build upon its bumper round of acquisitions in the last year, such as its $19bn purchase of WhatsApp, and $500m LiveRail buy.

"We plan on 2015 being a significant investment year," he said, although he did not elaborate on whether this would involve organic, or inorganic growth.

Shift to mobile

However, it was Sandberg (pictured, right) that highlighted just how important a role ad tech would play in the company's development, citing the recent relaunch of its ad server Atlas, as one of the key milestones Facebook's last 12 months.

"Atlas offers marketers offers marketers the ability to serve ads across multiple devices, and measure their effectiveness," she said, also promising further investment in the sector.

Sandberg went on to claim Atlas' age and gender targeting is 45% more accurate than the current industry average, adding that its customised data targeting opportunities also offered advertisers the opportunity to target lookalike audiences.

"We are investing in ad tech for a simple reason; consumers are shifting to mobile, and the advertising industry is failing to keep up with that change," she added.

Attribution

Sandberg further highlighted the importance of such investments to the wider advertising sector, claiming the industry's current "overemphasis on last-click" attribution, as well as reliance on cookie-based advertising was unfit for purpose in a mobile-first era.

"We [as an industry] are in the middle of a fundamental shift from cookie-based marketing on desktop, to people-based marketing across mobile devices," she said. 

Sandberg went on to articulate Facebook's belief that even the most basic demographic targeting on mobile is 59% accurate at best, primarily because the industry is primarily reliant on cookie-based targeting.

"We'll look to invest in ad tech... and aim to help solve all of these problems," she added. "It's clear that marketers and publishers need better tools… Our investments in ad tech will be an increasingly important part in these efforts."

Many view Facebook's relaunch of Atlas as opening up a new front on Google, whose DoubleClick is the behemoth of online ad tech, with  Itay Gadot, DMG, VP of sales and marketing, noting that Atlas' non-reliance on cookies as a key differentiator, in an earlier piece for ExchangeWire.

He added: "Atlas is clearly a major move by Facebook to take on Google on its home turf and capture a large piece of the display advertising pie. Aside from the move away from cookies, Atlas also purports to bridge the gap between the offline and online advertising worlds by linking the interactions of customers in the real world to their Facebook profile."

However, commenting on this week's Facebook results, Jon Myers, Marin Software, VP, and managing director, EMEA,  said this may not necessarily be the case, but did appear to back Sandberg's point that more sophisticated attribution models are needed.

He said: "Facebook’s success need not be seen as a threat to Google, since the companies serve very different purposes along a consumer’s path to conversion.

"We know that while consumers often first interact with a brand message on Facebook, they are more likely to purchase a product via a search engine.

"Smart advertisers are combining what they’ve learned about a consumer in browsing mode on Facebook and applying this when the consumer moves into buying mode on a search engine."