Facebook Expands Mobile Ad Net to Make a Run at Google, Yahoo

Facebook's mobile ad network is officially open for business.

Five months after the social network formally launched its Audience Network with a small set of app publishers and advertisers, Facebook is opening up the mobile ad network to any media buyer and seller. The company is also adding a new ad unit for marketers to drive traffic to their mobile sites.

A Facebook spokesman declined to say how many publishers are in the network or what the revenue split is with participating publishers but said the company has paid out millions of dollars to however many apps are participating. The first crop of publishers to sell ads through Facebook's mobile ad network include Shazam, Zynga, IGN, Le Monde, Merriam-Webster, MyFitnessPal, Glu Mobile, Wooga, Deezer and Vinted.

Facebook's mobile ad network is a way for the social network to grow its share of mobile ad dollars. Projected by eMarketer to rake in 22% of global net mobile ad revenue this year, Facebook ranks second behind Google, which is expected to take 47% of the market. Google's mobile ad business is considered to lean heavily on search advertising, but the search giant also makes money from ads sold across the 300,000-plus apps in its AdMob mobile ad network.

Facebook could put the squeeze on Google's network business if its unique targeting options win over advertisers and its prices win over app developers. That could also be bad news for Yahoo, which bought mobile ad and analytics firm Flurry earlier this year to open up its own mobile ad network business. Flurry's mobile ad network spans roughly 8,000 mobile apps.

Facebook seems to have thought out how to spur advertisers and app developers to sign on to its mobile ad network. Advertisers can target the ads in third-party apps with the same targeting options they use to aim their Facebook ads, such as age, gender, interests and whether someone is in their customer database or has similar qualities as existing customers. And Facebook is tethering its mobile network ads to its existing on-Facebook ad business, which could buoy app developers' ad prices above the notoriously dismal mobile ad rates.

Advertisers cannot buy ads on Facebook's mobile ad network without also buying ads on Facebook as part of the same package. "Audience Network was built to extend the reach of Facebook campaigns," the spokesman said.

Facebook may be using the mobile ad network as a kind of release valve to satisfy advertisers' demand for its ads without overloading its users' news feeds. Last quarter Facebook served 25% fewer ad impressions than a year earlier while the average price of each rose by 123% year-over-year. If that trend were to continue and accelerate, Facebook would risk its ad rates soaring so high and ad opportunities shrinking so low that discouraged advertisers might take their money elsewhere. The mobile ad network could return some balance to Facebook's supply and demand so that brands can buy not-ridiculously-expensive ads against Facebook's audience without those ads littering Facebook.

But there may be another reason Facebook is tethering social-network buys to its mobile ad network. Advertisers might see better results on Facebook's mobile ad network and siphon their ad spend away from the social network.

According to Facebook, not only was Walgreens able to reach 5% more people with ads on Facebook's mobile ad network than ads only run on Facebook, but the retailer received four to five times as many clicks on the network ads than on its Facebook ones. And HarperCollins received a 16% boost in the number of impressions for its mobile-network campaign compared to ads run only on Facebook.

Facebook is also adding a new mobile ad unit that links to an advertiser's mobile site in order to drive traffic. The mobile-ad network's first ads were designed to get people to install or use an advertiser's mobile app.

Advertisers can buy the new mobile ad unit by the click or by setting specific marketing goals and then asking Facebook to serve what its technology deems the right number of impressions to meet those goals, an arrangement called optimized CPM (or oCPM). The app-install and app-engagement ads are sold on a per-click, per-acquisition or oCPM basis.

As with the app install and app engagement ads, the mobile network's link ads can run as banners, full-screen interstitials or so-called "native" placements in which a publisher customizes the ad's appearance to resemble the app's normal content aesthetic. Asked if any of the three formats are more popular among advertisers and app developers than the others, the spokesman said, "We've seen a number of publishers easily implement banner and interstitial ads, and are continuing to see more publishers adopt our native format."