Bloomberg News

Facebook Unveils Mobile-Ad Service Aimed at Increasing Sales

August 08, 2012

Facebook Unveils Mobile-Ad Service Aimed at Increasing Sales

The Facebook iPad app. Photographer: Jason Alden/Bloomberg

Facebook Inc. (FB:US), owner of the top social-networking service, unveiled a tool that helps developers advertise their wares, adding to services aimed at boosting sales from people who socialize using smartphones and tablets.

The service helps game makers and other software developers encourage users to install applications on their mobile devices, Menlo Park, California-based Facebook said yesterday on a blog. The mobile-ad service is also designed to help app developers measure the effectiveness of their ads.

“We’re announcing a new way for mobile app developers to grow their business with an ad unit that helps them reach and reengage their users,” Facebook said.

Chief Executive Officer Mark Zuckerberg is under pressure to find ways to increase sales of ads aimed at people who use Facebook on mobile devices. The company’s shares have tumbled 45 percent since the initial public offering amid concern that it isn’t boosting sales quickly enough.

Mobile Ads for Apps, as Facebook calls it, is being tested with a limited number of partners, the company said.

A user who clicks on an ad on Facebook’s pages will be linked to an online store where they can purchase the application. The new service works with Apple Inc. (AAPL:US)’s App Store or Google Inc. (GOOG:US)’s Android market, known as Google Play. Facebook is also providing tools for monitoring the performance of an ad.

Mobile Challenge

Facebook said in the run-up to its May 17 initial public offering that sales growth wasn’t keeping pace with gains in users who, in growing numbers, are accessing the site via tablets and smartphones. The company, which only rolled out its first mobile ad service in March, said sales grew 32 percent in the second quarter, down from 45 percent in the previous period.

Mobile is a key area of focus for the company, Zuckerberg said during a call with analysts last month. Mobile users, who make up more than half of the membership, are more active than counterparts who use only the desktop version, he said.

“Mobile is a huge opportunity for Facebook,” Zuckerberg said. “Our goal is to connect everyone in the world. And over the next five years, we expect 4 or 5 billion people to have smartphones. That’s more than twice as many people as have computers today.”

Facebook shares were unchanged at $20.72 at the close in New York. The stock has dropped 45 percent from its initial public offering price of $38.

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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