Facebook Will Use Mobile Ads to Increase Revenue

In the aftermath of its IPO filing last week, Facebook will begin showing advertisements to those who access the social network through mobile devices.  Unlike most of its current site advertising, the ads will likely take the form of “stories” that will appear in user’s newsfeeds, rather than pop-ups or banners.  The move will represent a major test for Facebook, as it tries to figure out how to maintain a balance between user comfort and the needs of its shareholders.

As part of its IPO filing, the company made sure to note that the lack of “meaningful” revenue from mobile usage was an area of concern going forward.  Right now, about half of the social networks 850 million users access the site through mobile devices, and that number is expected to grow considerably as smartphones and tablets become more commonly used than PCs.  Right now, Facebook’s mobile apps utilize no advertising, and since Facebook makes its money through advertising, that basically means that mobile users are using its services right now for free.

The move represents Facebook’s attempt to monetize this new trend in usage and comes after its competitors such as Google and Twitter,faced user complaints about some of their efforts at advertising.  Later this month, Facebook will be holding an event that will encourage brands to pay for advertising by offering unique incentives, which some expect will likely somehow be incorporated into the company’s Timeline feature.  Right now, many companies can start their own page for free, forcing Facebook to find ways to encourage both increased spending for advertisements; advertisements that the company hopes, additionally, will link back to Facebook’s site.

As part of this effort, Facebook recently hired Rebecca Van Dyk, former marketing chief at Levi Strauss, who has previously worked on a number of high profile ad campaigns for Apple and who was the force behind Nike’s legendary “Just Do It” ads to head up the new initiative.

To contact the reporter on this story: Jonathan Morris at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com