Facebook plans to launch a new mobile advertising feature, placing targeted ads in news feeds based on the apps consumers use, the Wall Street Journal reported on Friday, July 6. Facebook's shares got a boost Friday afternoon following the news of its upcoming mobile advertising product.
According to the WSJ report citing unnamed sources "familiar with the company's plans," the world's biggest social networking company plans to roll out the service to developers and advertisers later this month, in an effort to further boost its mobile profile. In a rather strange move for Facebook, however, the ads will reportedly be placed whether or not a user has shown interest in the company doing the advertising. This move is strange because Facebook has repeatedly highlighted its commitment to serving users advertising content that relates to things they or their friends have "liked," instead of just random advertising.
The service would instead target ads to users based on the apps they have used on their mobile devices, the Journal reported. This would allow developers and advertisers to post ads on a Facebook user's new feed based on the apps they have on their smartphone. Revenue, meanwhile, will be based on the number of app-installations those ads manage to generate. Facebook made no comment on the WSJ report, but the new mobile ad system is expected to roll out later this month.
Facebook shares spent much of Friday in the red, but climbed nearly one percent following the report, closing at $31.73.
The social networking company's move highlights the great importance of mobile advertising for Internet companies. Facebook, as well as its arch-rival Google, generate the bulk of their revenue through the ads served to users on PCs. Mobile browsing has become increasingly more common, but ads over mobile devices have faced Internet companies with a considerable challenge for generating significant revenues.
Facebook's high-profile initial public offering (IPO) in mid-May generated significant controversy and disappointment, partly due to claims that the social networking giant misled investors on its growth prospects. Many consider those prospects to be closely tied to mobile advertising, as the number of users who are accessing the Internet via mobile devices is rapidly growing. Despite the slight climb following the report, Facebook's stock was still off roughly 17 percent from its IPO price of $38.
