Facebook is working on real-time location-based mobile ads, according to Bloomberg.[Update 6/18/12 12:10 p.m. PT - Facebook tells TechCrunch it did not confirm that such a product is in the works, though we have heard previously from sources that it is.]
The company has been testing several new ad products, and apparently showed almost a dozen ideas in April to a client council including corporate and agency executives. Although Facebook did not share details about how location-based ads would appear on users’ phones, it seems they could involve the social network’s new offers product.
“Phones can be location-specific so you can start to imagine what the product evolution might look like over time, particularly for retailers,” Facebook VP of Global Marketing Solutions Carolyn Everson told Bloomberg. “We’ve had offers being tested over the last couple of months.”[Update 6/18/12 1:11 p.m. PT - This is the quote Bloomberg extrapolated to claim Facebook will release a location-based ad product. Although our own sources have told us they are aware of a new location-based ad offering being developed, Facebook says in a statement, “We’re always looking at different opportunities across mobile, but we have nothing to announce this time.”]
A real-time location-based advertising option would be most significant to retailers and restaurants, which want to reach consumers when they are nearby. It’s unclear whether Facebook would use push notifications to show users these ads. A few months ago, we suggested this would be unlikely unless it was opt-in for users. Since the Facebook Marketing Conference, however, the company has gotten more aggressive about testing new forms of advertising, including asking users to pay to highlight their posts and allowing cookie-based retargeting ads to appear on the site.
The social network will need to be cautious about how it implements mobile advertising, however, because with screen space so limited, ads are more disruptive than they are on desktop. Offers will have to be extremely relevant and high value to warrant a push notification or an ad at the top of a user’s News Feed. Location-based ads also run the risk of making users feel like they are being constantly tracked.
Currently, Facebook allows mobile advertising in the form of Sponsored Stories, which are page posts or interactions that advertisers pay to promote to more fans or friend of fans. Because Sponsored Stories require a person’s friend to validate a piece of content by interacting with it in some way before it is shown as an ad, Facebook is not giving companies a direct ticket into the News Feed. The company might begin with something similar for its location-based ads. For instance, a user or one of their friends might have to have Liked a page or checked into a location previously in order for a mobile offer to be served to them.