The Value of Personalized Ads to a Thriving App Ecosystem

Over the last year, the industry has come together to engage in crucial conversations about the future of digital advertising. Through the World Wide Web Consortium (W3C) and other industry groups, we’ve engaged with publishers, developers, and advertisers to discuss new solutions that strengthen people’s privacy online. One example is Facebook’s proposal to use blind signatures to combat fraud while minimizing third party data collection from browsers and apps.

In conversations with our advertiser and publisher partners, we hear how important privacy-enabled advertising is in enabling new business models and increasing the diversity of online content in the ecosystem. Many apps cannot rely on other forms of monetization, such as subscriptions and in-app payments. This is especially the case for smaller app developers or specific types of content, such as casual games, which have been on the rise in recent years — where publishers have to rely on personalized advertising to sustain their business.

As industry conversations about the future of advertising progress, the Facebook Audience Network team has run tests to better understand the importance of personalized ads to the publisher ecosystem:

Facebook ads use multiple systems to select and deliver personalized ads for people -- and we deploy this personalization on behalf of 3rd party publishers and app developers. We ran a test that constrained delivery to just mobile app install ads for a small portion of Audience Network Traffic, then compared personalized ranking to non-personalized ranking. We observed more than a 50% drop in publisher revenue between these two treatments, with no changes made to targeting. (For an illustration of different factors that influence how ads are selected, see how Facebook Uses Machine Learning to Deliver Ads.)

These results are consistent with others we’ve seen published by the Interactive Advertising Bureau (IAB) and Google. Dave Grimaldi, IAB EVP for Public Policy notes: “Personalized ads are essential to maintaining a vibrant ecosystem, enabling a wide array of developers and publishers to flourish. For many years we have seen evidence of the value that is created by personalized ads, such as Harvard Business School Professor John Deighton's study published in February 2020, which found personalization contributes billions of dollars to publisher revenue. Facebook's research is yet another data point that underscores the positive impact of personalization." Together, these results demonstrate the immense importance of personalized advertising to the publisher ecosystem.

As we support industry efforts to strengthen privacy online, these examples highlight why it’s critical that we also work to preserve publishers’ ability to monetize through personalized advertising. We’ve heard many partners express the importance of sharing their perspectives with the broader industry -- we encourage app developers and publishers to engage with industry groups like the IAB to ensure their voices are heard as digital advertising practices evolve. We are committed to supporting the broader publisher and app ecosystem, and look forward to continued engagement on this important issue.

Several people on the Audience Network team contributed significantly to this work. Special thanks to Bhavin Manek, Charlie Chen, Graham Innocent, Lubo Malo, and Emre Bayram.