In the run-up to its IPO, Facebook is pushing down on the gas pedal in an effort to bolster the advertising business from which it derives much of its revenue.
Yesterday, as expected, the world's largest social network announced its new ad offering, Premium on Facebook. Those ads give advertisers more options and an ability to make their ads more prominent, but the jury is out on whether users will simply find them annoying.
Finding a way to boost ad revenues on the web without turning off users, however, probably isn't Facebook's biggest advertising challenge, and opportunity. Arguably, that distinction probably belongs to mobile ads, which by some estimates, could earn the Silicon Valley company more than $1bn in year one.
Until now, Facebook's mobile ad strategy, if it existed, hasn't been obvious. But there had been reports that Facebook was set to launch a mobile ad product in March 2012 and with the company's announcements yesterday, that changed.
So how will Facebook monetize mobile ads? To answer that question, the company apparently turned to Twitter. As Internet Retailer explains:
The social network...announced that it is adding its Sponsored Stories ad format to Facebook’s mobile application and also adding those types of ads to the Facebook log-out screen. Sponsored Stories enable advertisers to highlight posts or actions, such as when a consumer’s Facebook friend Likes a product, checks into a store, plays a game or uses a Facebook application. The move marks the first time mobile users will see ads on the social network.
That, in a nutshell, is Twitter's mobile ad model. Hardly inspiring, but by opting to go with a model that's already out there, Facebook may be able to mitigate the risk of launching an entirely new approach, something it's had limited success with in the past (remember Beacon)?
Unfortunately for Facebook, it remains to be seen whether its mobile ads will be the long-term game changer it needs. For obvious reasons, mobile is a difficult ad medium because it's so intimate and Facebook seems to be suffering from its typical naivety. In describing how Sponsored Stories will be limited to one per day, Facebook's VP of global marketing solutions, Caroline Everson, noted, "We want to make sure that over time the marketing messages are as good as the content that you see from your friends and family."
Facebook may or may not be successful in exploiting its huge mobile ad opportunity but one thing is for sure: ads will never be seen as being as good (read: important) as content from friends and family. Unless and until Facebook accepts that advertising is not realistically "content", it will risk alienating users, particularly as it pushes more and more ads their way.