From FBX to DPA - the Future of Dynamic Retargeting

Miikka Holkeri Sep 24 2015 6 AM | 5 min read


While many advertisers are still relying on demand-side platforms in their Facebook retargeting needs, the continuously renewing platform nowadays offers its own powerful, sophisticated technologies for that. Facebook’s Dynamic Product Ads are the answer to the growing need for dynamic cross-device retargeting and combine behavioral data with the vast amount of Facebook user information.

When Facebook Exchange (FBX) was launched in 2012, it was a big deal. FBX was the first ad exchange on social media and enabled advertisers to purchase highly targeted impressions on Facebook through a number of qualified demand-side platforms (DSP). This enabled DSPs to utilize the Facebook’s huge share of the web’s total media inventory to be used with dynamic retargeting, which had been in use around the web providing impressive results.

Exchange Retargeting

Ad exchanges are platforms that facilitate buying and selling of advertisements from various online publishers and placements. Each ad impression for each individual user is purchased through real-time bidding at the same moment a web page is loaded. Typically advertisers use demand-side platforms (DSP) that combine offerings from multiple ad exchanges into one interface.

DSPs can collect behavioral data from individuals by augmenting websites with tags that drop browser cookies with unique identifiers on the visitors’ computers. The tracking information from their client network can then be combined to tailor the ads displayed for each individual. This can include retargeting users with content based on what they have viewed but not purchased before.

Cookie-based retargeting has some shortcomings. Browser cookies are device-specific, not user-specific, and they get frequently cleared by users and browsers.

Facebook's Massive Shift to Mobile

The problem with exchange retargeting is that it’s based on browser cookies which prevents it from working across multiple devices or with Facebook’s mobile app. But is that so bad? Well, Facebook has made it clear lately that mobile is its top priority. The users are showing it too: In Q2 2015, 88% of Facebook’s monthly users used the service on their mobiles and 44% of all users used it only on mobile. A whopping 76% of Facebook’s ad revenue comes from mobile.

And it’s not only that Facebook is shifting to mobile. People are using multiple devices during their days which reduces the effectiveness of cookie-based retargeting. For example, imagine Jane browsing flights to French Riviera on her mobile in a bus after a long and exhausting day at work. When she gets home, she logs into Facebook on her desktop. This would be the perfect moment to retarget her with those flights to Riviera but advertisers using FBX miss the opportunity.

Track Real People Instead of Cookies

In the beginning of 2015, Facebook introduced its own dynamic retargeting solution Dynamic Product Ads, a serious competitor to FBX. Instead of trying to work with the limitations of cookies, Facebook developed its own custom audience tracking technology that’s user-specific and works cross-device.

Combine User Actions with Demographic Data

While DSPs are able to collect large amounts of behavioral data from their tags on their clients’ websites, the users are only anonymous IDs for them. In addition to Facebook building a vastly broader network for collecting behavioral data, it has comprehensive demographic information, e.g. age, gender, interests and friends, of its users. Combined together, they provide an unprecedented way to deliver the most relevant offering for each individual.

The strength of exchange retargeting is that an advertiser is able to retarget via multiple channels using the same DSP as Facebook is just another placement for them. This comes with a cost, though. Exchange creatives are seldom optimized for Facebook which can increase their price in auction due to Facebook’s strict standards for creative quality. Moreover, DSPs have to rely on a very limited set of data, i.e. cookie ID, time of day and placement, when bidding. They can’t use the optimized bidding types that Facebook has developed for maximizing the number of desired actions.

Retarget with All the Native Facebook Options

Unlike FBX, Dynamic Product Ads work with all Facebook’s native targeting, bidding, creative and ad placement options. DPA campaigns are able to use all the ad formats, including the new Carousel ads. They can also utilize Mobile App Ads with deep links to specific actions inside an application. Besides that, the advertiser will get all the data from the impressions and conversions and is able to optimize the campaigns based on that.

It can be difficult for advertisers to compare the performance of FBX and native Facebook campaigns as the actual bid values in the former are not visible for them. It’s typical that FBX ad impressions are sold based on different metrics and their prices can contain significant margins baked into the media fees. Furthermore, if an advertiser uses both FBX and native Facebook campaigns, they can end up competing against each other as there’s no way to dedupe Facebook and FBX audiences.

Development of DPA Continues

Although DPA is already a very powerful way to conduct retargeting, things are still very much in the beginning and Facebook will be continuously rolling out new features for it. Optimization for conversions and the ability to create so-called up-selling and cross-selling campaigns will be added in the following weeks. So Jane can be offered business class flights as well and when she has purchased the flight, she’ll be shown some nice hotels in French Riviera.

In the spearhead of innovation are the Facebook Marketing Partners which keep constantly developing features on top of these capabilities. Here at Smartly we are especially proud of our Dynamic Image Templates which was recently awarded with the Facebook’s Excellence in Innovation award.

Dynamic Retargeting Comparison Chart


Feature Dynamic Product Ads through Dynamic Product Ads through FB Facebook Exchange
Dynamic retargeting Yes Yes Yes
Retarget people who have visited your site for the last 180 days Yes Yes No
Supports mobile retargeting Yes Yes No
Combine with native Facebook targeting Yes Yes No
Optimized CPM bidding for Dynamic Product Ads Yes Yes No
Dynamic Carousel Ads Yes Yes No
Automated Ads & dynamic prospecting Yes No No
Dynamic Image Templates Yes No *
Supports multiple feed formats Yes No *
Flexible feed filtering Yes Partly *
Dynamic Product Ads for mobile apps Yes Yes No
Supports mobile app engagement ads Yes Yes No

* depends on the FBX partner

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Miikka Holkeri

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