FINALLY: A Plain-English Explanation Of Why Facebook Bought Microsoft's Atlas Ad Server

When Facebook bought Microsoft's Atlas ad server back in February, hardcore adtech execs were abuzz. It was one of the most important deals Facebook has ever done, and probably the most important since it went public.

In terms of Facebook's continued ability to drive revenue, and to prove to advertisers that its ads actually work, the Atlas deal - a mere $30 - $50 million - will probably be much more important that its $1 billion Instagram acquisition.

But one problem with the deal is that unless you're a hardcore adtech exec - and those people number in the mere thousands, nationally - the deal was almost impossible to understand. Its rationale was delivered in jargon-laden adtech-speak, which is full of phrases like "last-touch attribution," "closing the loop," and "inventory access."

And, frankly, even a lot of people inside adtech didn't understand what the Atlas deal meant.

But over on Medium, Antonio Garcia-Martinez, a former Facebook product manager, has written this eye-witness account of what happened inside Facebook when the Atlas deal was done. And it simplifies things dramatically:

When the Atlas deal was in play at Facebook, all of the product managers involved ran to the IT Help Desk to get a Windows laptop to check out this thing we were supposedly buying. Believe it or not, Microsoft's Atlas only ran on specific versions of Internet Explorer (in case you're too young to remember, that's a browser). Unfortunately, unlike vintage clothing, user interfaces never get so old that they're fashionable again. It was creaky and ancient, and possessed a flow so convoluted that even professional ads people got lost in the mess. But it had 20% marketshare.

Many non-Facebook people discreetly expressed disbelief about the acquisition to me, questioning how we could buy such a neglected piece of legacy technology. I don't think it was such a bad move, necessarily. For a modest sum, Facebook jumpstarted a presence in the display ads world in which we were an afterthought.

Atlas might have been old, but 20% of the ad serving market is still huge. What Facebook had bought was an "abacus," Garcia-Martinez says, that counted ads both on and off Facebook, basically. That would allow Facebook to serve ads inside Facebook and outside Facebook, and have advertisers see them measured in the same comparable way. Now Facebook is competing on an even playing field with Google, and advertisers can easily see who is best. He continues:

Of course, with acquisitions it's not what you pay, it what it costs you that matters. Facebook will have to feed and maintain a mountain of crap code (and the crappy coders who created it) for a long time to come. But hey, Facebook now has an abacus that people use.

... Whether they like it or not, social media platforms like Facebook and Twitter will have to play ball with the display ad server world. Facebook has already figured this out and invented what's called 'view tags' to deal with it. How does it work? The ads you see on Facebook are always served from a Facebook domain: One can only imagine Zuck's conniptions if ads on Facebook were ever to load slowly thanks to third-party ad serving. Instead, a tiny 1x1 pixel from Google, or whoever else, gets loaded on Facebook ads. So you're loading a little piece of Google every time you hit Facebook, whether you realize it or not. That's enough for an outside ad server to touch the user's browser, and note the ad impression: The accounting benefits of the ad server, without actually serving the ad.

Read the whole article here.

Disclosure: The author owns Facebook stock.