Facebook Inc. is conducting what it calls a “small test” of a service that places mobile ads in applications outside of Facebook. “We think that showing mobile ads outside of Facebook is another great way for people to see relevant ads and discover new apps,” says a Facebook spokeswoman.
Facebook is working with an undisclosed number of ad exchanges to present ads to consumers using iOS and Android devices. The ads, which may point shoppers to a mobile web site or to download an app, use the same targeting as ads on Facebook.com.
By placing ads on outside applications, Facebook is essentially acting as an ad network. In doing so it is able to collect a portion of the revenue generated from the rapidly growing mobile marketing space.
Because consumers are increasingly using mobile devices to navigate the web, it makes sense that mobile is where Facebook would experiment with an ad network, says Colin Sebastian, an investment analyst who follows Facebook at R.W. Baird & Co. “We see this as a logical place to create a network, although Facebook will ultimately launch a broader advertising platform across the web,” he says. “In our view, Facebook has the potential to become a more relevant ad network than Yahoo and AOL, and to compete more directly with Google.”
That’s because Facebook has a wealth of information about its users. And it could enable marketers to target consumers based on that information with ads across the web. For instance, a Facebook user who Likes running might see an ad displayed on a news site for a sports drink that one of his friends Likes, says Sebastian.