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Facebook Launches a Mobile Ad Exchange on Top of LiveRail

Take notice, Google and Twitter.

Facebook announced a number of expected updates to its ad product LiveRail at its F8 developer conference Wednesday, including the use of Facebook user data, instead of just Web cookies, to help advertisers target users outside of Facebook.

LiveRail is Facebook’s existing ad server for video ads, which means the technology helps publishers manage their video ad inventories and ensure the right ad appears for the right user.

As part of Wednesday’s update, Facebook is also expanding LiveRail’s ad management capabilities to mobile display advertising, meaning publishers can use the technology to sell both video and display ads on their mobile apps.

As an ad exchange, LiveRail can auction off extra ad space to the highest bidder to ensure all ad vacancies are filled. Until now, LiveRail’s exchange was limited to video ads. With the update, publishers can fill ad vacancies for mobile display ads as well.

What’s significant in this announcement is that LiveRail will now use its anonymized user data to help publishers serve better targeted advertising on platforms that aren’t Facebook. So instead of relying on things like Internet cookies to help publishers target a Web visitor, publishers using LiveRail will be able to add Facebook’s user data into the mix to get a better idea of who’s watching the ad.

That’s a big change since Facebook owns what amounts to currency in the ad world: User information. As more publishers and advertisers use Facebook data instead of Web cookies to target ads, it will increase the benefits of LiveRail for ad buying, potentially cutting out other exchanges and networks. Web cookies, which proliferate widely, still underpin most of the online ad infrastructure.

Wednesday’s changes should put Google and Twitter on alert. Google already offers DoubleClick and Twitter has MoPub, both of which operate as similar ad exchanges. Facebook was, in theory, missing out on potential business.

The key for Facebook is the user data, which it believes sets its ad tools apart from the competition. Twitter offers some user targeting through MoPub, but not on every transaction. And even if it did, Facebook believes it has better user data than Twitter (or anyone else, for that matter).

Google’s DoubleClick is focused more on intent data — what did you search for? — and Facebook, again, believes its user data will result in a better ad.

Facebook’s goal is to provide publishers with every ad tool they might need, from managing and tracking ads, to selling ad space in bulk, to selling ad space in real time. Now it does that — at least in theory — and it’ll be up to developers to decide which products to use.

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