Rumor has it Facebook is planning to tackle mobile advertising this year, but the move may come sooner than you think. Facebook is planning on inserting Featured Stories into people's mobile feeds "within weeks," according to sources familiar with the matter cited by The Financial Times. If true, you could see Facebook ads on your smartphone as soon as early March, and the company will finally be able to say it has an answer to its mobile problem.
Last week, Digiday quoted Paul Gelb, head of mobile for agency Razorfish, talking about Facebook ads on mobile. Here's an excerpt:
Razorfish mobile practice lead Paul Gelb confirmed the agency is currently engaged in pilot programs for "mobile and cross-platform rich-media ads," and from what he's seen, he's "extremely excited" by the potential impact. It remains unclear on what basis the ads will be sold, but Gelb implied advertisers will be able to reach users across all devices with a single buy. Judging by Facebook's desktop ad formats, it's likely they'll be disseminated across users' networks as they interact with them.
Gleb's statements were quickly misconstrued by many, so he clarified on Twitter (1, 2, 3): "I would like to clarify a statement I made in an interview yesterday regarding Facebook. Razorfish is NOT working with Facebook on any mobile media ad buying. Rather, in the interview I was referring to rich media featured stories, not paid ads."
For its part, Facebook also denied ads were coming. "We want to clarify that we are not working with any agency to create paid ads on our mobile platform," a Facebook spokesperson said in a statement. Facebook may not call them ads, but that's how they're viewed (like the ones in the News Feed).
When Facebook revealed last week that it had 425 million mobile users as part of its filing for an initial public offering (IPO), the company admitted that it was still not monetizing its mobile users. In other words, Facebook's mobile business is not making any money. In the Summary Risk Factors section, the filing stated: "Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results."
Facebook has managed to establish itself as a major advertising supplier because it has a unique offering to businesses that are willing to gamble a little with their marketing dollars. Advantages include being able to target users with a precision not found in most other forms of advertising. With its quickly growing user base (845 million monthly active users and counting), the company's social graph is exploding across all demographics, which only further fuels improved ad targeting, performance, and revenue as well.
If it can replicate the same success on the mobile side of things, the company will be able to create a respectable new source of revenue for itself. It won't be easy. Facebook will have to consider the usual potential privacy issues, as well as figure out how to work around the problems every advertiser faces in mobile: small screens, slower connections, and the strong relationship users have with their personal devices.
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