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Facebook’s Ad Evolution Leaves Ad Exchange Behind

Three years after Facebook launched its Ad Exchange that marked an aggressive entry into the use of real-time bidding technology in ad sales, the social media giant is changing direction, causing waves among both advertisers and ad tech firms.

In recent months, as part of its shift in advertising strategy toward mobile, and in particular app-install ads, Facebook has made clear to advertisers and ad tech partners that it is moving away from a reliance on its Ad Exchange, an automated ad selling service.

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Mr. McFarland expects the advertisers who relied on real time bidding on Facebook, and saw results with it, to be slower adopters to Custom Audiences. The Facebook Ad Exchange felt like familiar territory to many of them, and the hope on Facebook’s part is that they’ll come around to a mobile Newsfeed eventually.

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Multiple ad executives say for advertisers with a broad array of products the new tool can’t be as efficient as the real-time bidding model that Facebook and other companies’ ad exchanges offer.