Facebook has pulled a big ad tech project because there were too many bots and bad quality ads

Facebook has confirmed it has pulled its plans to build a demand-side platform (DSP) into its ad server and measurement platform Atlas.

Facebook began testing out a buying platform within Atlas last year, allowing a small set of marketers to use the social network's "people-based" targeting capabilities to bid on advertising on other sites and apps, programmatically - or in other words, in real-time, using automated software.

In a blog post published on Monday, the social networking company said the buying platform test didn't deliver enough value for advertisers because the quality of ads on the open web that it was buying through advertising exchanges was too low - often delivering ads to bots not humans. "Ad fraud," as it is known in the industry is expected to cost marketers $7.2 billion in wasted ad spend this year in the US alone, according to a study from the Association of National Advertisers and ad fraud detection service White Ops.

Facebook's test found that only native ads - those designed to look congruous with the other content on the website or app they are sitting in - and video ads were delivering good results.

Brian Boland, Facebook's vice president of ads product marketing, told Business Insider that native and video formats delivered "7X" better results than banner ads. The problem right now is that the majority of ads being bought through DSPs on the desktop and mobile web are banner ads, so Facebook is refocusing Atlas' plans around "building a product in our mission to help marketers deliver and measure true business value," according to the blog post.

Native and video are its longer-term bets and in the meantime, Atlas will be redoubling its efforts around ad measurement.

Facebook also looked at the ads that ran through its LiveRail ad tech platform, which helps publishers with monetization through video ads. However, it discovered the same quality issue and removed more than 75% of the inventory coming into its exchange. It switched off the publishers that were delivering ads that weren't actually viewable, or those on sites that marketers would never want to be advertising on. In January, Facebook confirmed it would no longer be accepting new customers into LiveRail's ad serving business.

Boland said: "There are some fundamental things we want to have in place around video. The video ecosystem is fraught with low-quality supply."

What Atlas plans to do next

While Atlas doesn't have a DSP in place just yet with real-time bidding capabilities yet, Facebook is still bulking it out with some new tools.

One of those is video ad serving across desktop and mobile, which will become available towards the end of this month.

At this stage, Atlas is mostly focused on the measurement side of the piece. Many marketers are already using Atlas to match up users as they cross from one device to the other. Facebook has a big advantage here over other ad tech players because people tend to log in to Facebook on their mobiles, desktops, and tablets using a verified ID. Using Atlas' "path to conversion" product, advertisers can determine if a user that saw a mobile ad went on to buy a product on their laptop, for example.

Atlas is also going to provide advertisers with insights on whether those ads also led to offline sales, by allowing advertisers to upload their point-of-sale data. Depending on the method advertisers use - asking for an email address at the till, or using loyalty card data, for example - Atlas will match that data with its own records in an anonymized, hashed fashion in order to tie conversions with digital ad spend.

Boland said: "The important thing to understand is that we are taking a fundamentally different approach. Our approach is helping marketers understand value. We're focusing on a mobile-first approach, when other tech is desktop [-first] which can struggle with the mobile environment. Our entire company is mobile-first and we are bringing advertisers this ability in a way no other system can."

In October last year, Facebook told Business Insider that the top 10 advertisers that work with Atlas - brands including Microsoft, KLM, and Nestle - spend more than $20 billion in advertising across all media. Atlas' head of global sales Damian Burns said at the time, Atlas was only using "15-20%" of its full functionality.

While advertisers are clearly finding the measurement tools useful (Facebook outlines case studies from KLM, Mini, and Banque Populaire in the blog post,) the next piece of the jigsaw Facebook will need to find is the bidding capability if it wants to take on market-leader Google DoubleClick. Last week, trade publication AdExchanger highlighted that many advertisers simply see Atlas as a "measurement pixel" rather than a fully fledged ad server.