The social media giant said this week that it is bringing campaign management capabilities in-house for the first time for dynamic retargeting rather than forcing marketers to partner with a third-party. Target is one of the early adopters, reporting a 20 percent conversion increase compared with other Facebook ads and, on mobile, two times the conversion rate. 

?Product Ads will be very significant for Facebook, as the primary use case will be retargeting consumers who have visited brand?s Web sites or mobile apps, to re-engage them in a meaningful way,? said San Francisco-based Todd Herrold, senior director of product marketing for Kenshoo. 

?Product Ads are essentially the natural evolution of Facebook Exchange ads and rely on Facebook?s Custom Audiences from your Website capability to target mobile consumers, which FBX does not,? he said. 

?Consumers spend a great deal of time in the Facebook mobile app, so Product Ads will serve a critical role in extending the cross-channel effects of their mobile search campaigns in a way which previously wasn?t possible.?

With product ads, marketers can upload their product catalog and create campaigns targeting certain products to specific audiences. Alternatively, marketers can let Facebook automatically deliver the most relevant products to consumers. 

The ads can be targeted based on reaching those who have visited a brand?s Web site or app or based on specific interests, locations and other data. 

Marketers can also choose to showcase products that were viewed on their Web site or mobile app or their best-selling items. 

Facebook can also turn off ads for specific products when they are out of stock. 

A Target executive was quoted in the Facebook post announcing product ads as saying that the performance of dynamic product ads has been particularly strong with consumers shopping o mobile devices. 

Shutterfly.com is another early adopter. The brand reports that it used the multi-product ad unit to offer gifting inspiration for current customers and to introduce products to new customers, resulting in a 20 percent increase in click-through rate. 

?Dynamic ads are always the top performing ad unit for retailers so bringing this functionality into FB with native ads is going to give advertisers the ability to show more relevant ads with more relevant products to users with more granular targeting by layering in retargeting lists from WCA with the Facebook proprietary info that DSPs can?t leverage,? said Michelle Alfano, director of display management at Merkle RKG, Charlottesville, VA. 

?It?s also going to give advertisers an edge at cross-device within Facebook by tying dynamic creative performance on both desktop and mobile to conversions,? she said. 

The news points to several key trends, including the continued growth in retargeting, the growing strength of leveraging mobile to reach consumers interested in shopping and how Facebook is increasingly becoming a full-service advertising platform. 

It also speaks to how consumers are increasingly finding products of interest on social media sites where they spend a lot of time as opposed to actively conducting online searches. 

The challenge for marketers will be the same with retargeting in general, which is how to personalize messaging and products without appearing like shoppers are being stalked across the Web and apps. 

Marketers also need to be careful that they keep their product feeds up-to-date so that ads are not showing out-of-stock items or previously purchase items. 

Marketers will also need to ensure that their imagery is appealing. 

?Since marketers will now be able to promote specific products and use multiple images to create ads from (Facebook will auto-optimize images for the highest response), they?ll need adjust the way they think about how images appear on their Web sites and in product feeds,? Kenshoo?s Mr. Herrold said.  ?These images will appear in ads, and visually appealing and engaging images are a key component for campaign performance; the right images can make all the difference between campaign success and failure ? so marketers need to be sure the images being pulled for Product Ads are putting the products best foot forward.?

While marketers are likely to be intrigued by the new offerings, Facebook faces a couple of challenges capturing a bigger portion of brands? marketing budgets. 

Initially, marketers may find themselves challenged by how to leverage these new Facebook capabilities. 

?When brands begin using Facebook?s product ads, they should have ample support staff ready to troubleshoot and QA dynamic ad creation, ad serving, and reporting,? said Tamar Dilsizian, senior manager of display media at The Search Agency, Los Angeles. ?Depending on how large or complex the feeds are, many advertisers are going to need some hand holding at first, as mastering the platform can take some time.?

 

Facebook may also need to adjust how it tracks conversions to meet marketers? needs. 

 

?Currently, Facebook?s conversion tracking does not differentiate click conversions and view through conversions that occur within 1 day in its reporting and optimization algorithms,? Ms. Dilsizian said. ?Although most marketers value the power of view through conversions, many would still like to see this as a separate metric from click conversions, as brands inherently track different user behaviors. 

?If Facebook makes this change to tracking, more advertisers will likely be willing to move all their Facebook budget over to the new platform directly rather than leave that spend within 3rd party hands,? she said.