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Under pressure, Facebook to track app usage for mobile ads

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Under the gun to show that it can make big money in mobile, Facebook(s FB) is reportedly planning to unveil a new product that will target ads based on the apps a consumer has on his phone. Citing people familiar with the plans, The Wall Street Journal said Friday that the recently public social network is set to give developers and advertisers the ability to place ads for mobile apps in a user’s News Feed.

Facebook’s technology, which reportedly builds on its Facebook Connect feature, lets companies track the apps people have downloaded to their devices and then target ads accordingly. In February, Facebook started surfacing Sponsored Stories in users’ mobile News Feeds, but those ads were targeted by items users had “liked.” The new targeting approach, however, will not consider whether a user has indicated an interest in the company. The company will charge companies each time a user downloads the app advertised, the WSJ said. Facebook declined to comment on the matter.

Mobile revenue has been a sore spot for the company for months. While Twitter has had success with its native mobile advertising (even reporting that mobile revenue outpaces desktop revenue), Facebook has been slower to make money from the 500 million users who access the social network from a phone.

Ahead of its IPO, the company admitted in a filing that it didn’t generate “meaningful revenue” from mobile, which drew concern from the SEC. In the months since its IPO, Facebook shares have traded below its opening price, partly because of its mobile problem.

No stranger to privacy flaps, the WSJ said Facebook is already bracing for the reaction to the mobile tracking product and may have COO Sheryl Sandberg mention the ad product in its first post-IPO call with analysts at the end of the month. Even if the privacy issue doesn’t spark a backlash among users, it will be interesting to see how users respond to the ads themselves. For the most part, users seem to have quietly accepted the Sponsored Stories on mobile, as well as Twitter’s approach to mobile advertising. But Facebook tends to be more private than Twitter and users may not respond positively to the new marketing messages from companies they’re not necessarily interested in, in an intimate, small-screen environment.

Given how quickly users are moving to mobile devices, and how many advertising dollars are expected to be spent on mobile ads, Facebook has little choice but to be as aggressive as it can be. According to eMarketer, mobile ad spending in the U.S. will grow 80 percent to $2.61 billion this year.

5 Responses to “Under pressure, Facebook to track app usage for mobile ads”

  1. Amanda Schwoegler

    While I understand that Facebook needs to find a revenue model for mobile, I believe that this tactic will deter people from using their app.

  2. I think it is not worth the trouble, i mean the money that this targeting data will get for fb is too little compared to negative PR.

  3. Michael Essany

    Unfortunately, Facebook is probably going to catch a lot of flack for traveling down this road, but I think the move will be a successful one in the long run. Unable to monetize mobile today, the only way for Facebook to turn things around is to begin skillfully targeting users with highly relevant ads and messages to ramp up conversation rates for advertisers and make the mobile ad experience a generally more positive one for Facebook’s 500 million active mobile users. The team at Airpush just published an awesome article about the value of highly relevant mobile messaging. Worth a read –

    • Ki Mae Heussner

      Hi Steve –
      According to the WSJ, the new product makes use of Facebook Connect, which allows people to log in to millions of websites and apps. If you’ve used FB Connect to log in to an app, Facebook would know that it’s on your phone.
      – Ki Mae