Facebook Inc. (NASDAQ:FB) had already been mentioning the slow rollout of a Facebook Ad Exchange, also known as FBX, but now one of the company’s executives is actually speaking out, perhaps even raising expectations on a service that Facebook Inc. (FB) likely needs to prop up its flailing stock price. Is this something investors in Facebook stock – like billionaire fund manager George Soros of Soros Fund Management – want to hear, or would they rather that Facebook minimize expectations?
But is it wise to raise expectations when there might not be any? Facebook Inc. (NASDAQ:FB) executive Carolyn Everson must feel very confident about FBX, based on the comments she made this week in a meeting with reporters at Advertising Week in New York. Everson came out and predicted with some form of clarity that Facebook Ad Exchange will “unlock a significant amount of spending around the globe.”
First of all, what is “significant”? And does Facebook Inc. (NASDAQ:FB) believe that FBX will help the economy accelerate its currently slow recovery? However these questions are answered, this seems like a very bold prognostication coming from someone at Facebook Inc. (NASDAQ:FB).
The Facebook Ad Exchange is a different ad-sales model than Facebook Inc. (FB) has run in the past – and is actually more consistent with what Google Inc. (NASDAQ:GOOG) has been running for years and made much of its ad revenue. FBX involves third parties buying Facebook Inc. (NASDAQ:FB) inventory, place the inventory into categories according to their own data, then sell that inventory to advertisers. In this vein, the advertisers then can buy inventory using a re-targeting model, which has been effective elsewhere on the World Wide Web.
While Facebook Inc. (NASDAQ:FB) currently has a small marketplace for FBX, there are those who believe the return on investment is potentially so high that Facebook Inc. (FB) may be able to sell its advertising at a higher rate than it does currently, which would further increase its revenue. FBX is due to be rolled out on a greater scale in coming weeks, though what impact it would have on the company’s fourth-quarter 2012 earnings remains to be seen.