Since Facebook first removed banner ads internationally we have been hearing more information about Facebook’s intentions. Between the leaked Facebook presentation we posted last week and advertisers that have been working with the Facebook ads team, we’ve been hearing a number of things. Most important is Facebook’s motive behind removing the skyscraper ads internationally, something we covered at the beginning of January.

Facebook’s Emphasis On Engagement Ads

One source we spoke to suggested that Facebook’s removal of skyscraper ads, which were sold at a reported $1 CPM, was an attempt to drive more buys of the homepage engagement ads, which currently sell at around $3 to $5 CPMs. So how is that strategy working out? One executive of the largest global marketer, Procter & Gamble, told attendees of last week’s “Innovation Outreach Venturing Day” that he was somewhat skeptical about the efficacy of Facebook’s engagement ads.

Despite his skepticism, the company is now bullish on Facebook ads overall, which means Facebook simply needs to optimize their ad strategy. Jim Breyer, a Facebook board member and investor, told attendees at the DLD Conference in Munich, Germany that he doesn’t “believe that Facebook or any other social network will approach Google’s efficiency when it comes to advertising”.

The picture being painted is that Facebook is still trying to perfect their ad sales strategy while exploring new monetization routes. Advertising is supporting the site and helping to keep the services freely available, while new monetization models will provide Facebook with a large portion of their growth opportunity.

Are The Skyscraper Ads Completely Gone?

Just yesterday we received screenshots from a user in India of banner ads that were still live, however Facebook’s own presentation suggests that these will be phased out in the first quarter. As one advertiser explained to us, this will leave a significant gap in Facebook advertising offering. Many advertisers want to do large reach buys at the $1 CPM level.

One potential reason for the removal of banner advertisements is that Facebook’s self-serve advertising platform is performing better than banner advertisements. As a Facebook spokesperson told Business Week earlier this month, “Ad formats that feature social actions perform better and provide a better user experience since they are more consistent with the look and feel of Facebook”.

As such, any advertisers looking to purchase ads of a large reach will have to choose from Facebook’s homepage engagement ads, or use an agency that’s integrated through the Facebook Ads API to manage large scale campaigns. For the time being, banner ads are not gone, but as the phase out takes place, advertisers looking to place buys will be driven to the company’s two primary ad distribution channels: engagement ads and self-serve performance ads.