Recently, Facebook announced an overhaul of its ad tech stack. The social giant plans to shutter FBX, its desktop ad exchange, as well as LiveRail, its video ad network (purchased two years ago for a rumored $500M), in favor of its proprietary Facebook Audience Network (FAN). In addition to putting its open ad exchanges out to pasture, Facebook opened up FAN to serve ads to non-Facebook users on third party websites and apps.
The close of FBX means that DSPs can no longer easily place ads on Facebook without integrating deeply with Facebook’s Ads API. The shuttering of LiveRail means that many large video publishers (like Hulu, Vevo, CBS and Conde Nast) will need to find alternate solutions to monetize videos on their websites. Ad inventory and targeting on FBX and LiveRail was often of questionable quality (according to Facebook’s own published research), so the dollars previously spent there will now have to find a new home — and that will likely be higher quality walled garden inventory.  
By focusing on FAN, Facebook signals its vision of digital advertising’s future: not in cookie-based, desktop-heavy targeting, but in sophisticated interest-based targeting across devices. While FBX and LiveRail allowed advertisers to use their own audience data to target ads, FAN is fully based on Facebook’s own user data. While Facebook knows less about non-users than logged-in users, through a mix of data, pattern matching, and plugins, Facebook can infer substantial audience characteristics from its huge data set. You know that ubiquitous Facebook share button that lives on almost every web page? That sends usage data to Facebook even if you’re not a user, and tracks you across the web.
This is good news for advertisers and viewers alike — FAN’s targeting leverages Facebook’s vast user data, meaning viewers see ads that are better tailored to their interests. As with Google Display Network (Google’s FAN equivalent), it remains to be seen how good the quality of third party inventory really is, but Facebook’s push for superior targeting and high-quality ad formats should enhance the advertising experience across the web.
Pixability unlocks the best performance in walled garden video advertising. For insights into how we make video advertising better for media agencies and brand advertisers, download our strategy guide to Video Advertising on Walled Gardens.