With Ad Network, Facebook Targets Rest of Mobile World

Publishers Like the Huffington Post and The Mail Online Are Partners

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After tests that date back to 2012, Facebook has formally launched its in-app mobile ad network, which will use the full suite of targeting options available within the social network itself.

That means that marketers can target Facebook users within other mobile apps based on their interests, likes and the demographic data that they provide to the social network, as well as via the more sophisticated targeting options Facebook offers, such as "custom audiences," which uses a marketer's CRM data.

Announced at its developer conference f8 today, the "audience network" is partnering with a relatively small set of publishers that include the Huffington Post, vintage clothing site Vinted and popular game Cut the Rope. Banners and interstitials as well as more native formats that can mimic the ad experience of Facebook's own news feed ads will be shown. Target, Coca-Cola and Audible have been advertisers during the recent test.

"This is really the first time that we're going to help you monetize in a serious way on mobile," said CEO Mark Zuckerberg, addressing the developer audience. "The mobile ecosystem needs a way to deliver these native personalized ads to people."

Facebook is selling the inventory itself and didn't disclose what the revenue share with publishers is. Placements will be purchased through Facebook's ad auction and can't be programmatically bought.

Grand experiment
Effectively, though, the Facebook mobile ad network is a grand experiment.

Facebook has clearly cracked the code on mobile within its own walls, largely due to a combination of powerful targeting and the native in-stream format of news feed ads. But, ultimately, the big unanswered question for its mobile ad network is whether Facebook targeting on its own is a powerful enough ingredient to elevate ad performance above competing networks when other publishers' formats are used.

"[It] begs the question as to whether the humble mobile banner ad is transformable without either the user experience of Facebook or without the format of the Facebook ad unit and its social credentials," said Rob Norman, GroupM's global chief digital officer. "The answer to the question is I don't know."

For Facebook, the potential upside for its top line is considerable. It's a means of showing users more ads without increasing the ad load in news feed. If it proves effective, the audience network will absorb some of the advertiser demand for placements in the mobile news feed, which has been driving Facebook's revenue growth of late. Mobile accounted for 59% of Facebook's ad revenue in the first quarter of the year, up from 30% a year earlier, and has been steadily climbing.

"It could give them a channel to use their data without cluttering up the place where they collect it, so that Facebook can remain the treasure trove of users that it is," said Rachel Pasqua, MEC's mobile practice lead.

While it's much too early to tell whether Facebook's audience network will replicate the company's success with news-feed ads, it's bound to put some pressure on independent mobile ad networks and help the social network vie against Google for a greater share of the mobile ad pie. It also might help grow the size of that pie by urging Facebook advertisers to spend in other mobile environments.

"Now that Facebook is expanding beyond its own boundaries, I think it will create tremendous competition for the smaller players and add pressure," said Cathy Boyle, eMarketer's senior mobile analyst. "But I also think it will help money flow into mobile."

Facebook is clearly trying to cross its t's and dot its i's with respect to user privacy. Banners and interstitials powered by the audience network will display the AdChoices icon (a little blue triangle), which has become commonplace on the web to signify that an ad has been behaviorally targeted. Tapping on the triangle would take a user to a page that explains the ad was sourced by Facebook. Native ad units will be marked as sponsored but won't integrate AdChoices at this time.