Facebook could be looking to introduce ads to its mobile platform early next year before an anticipated initial public offering. According to reports, these ads would be in the form of Sponsored Stories, which turn user activity such as liking a page post into promoted units.
These ads would be particularly effective for mobile games and apps since they would drive directly to a point of conversion. Other companies would more likely find value in mobile Sponsored Stories if Facebook expanded the coupon feature we discovered it was testing last week. This would give brands a way to present consumers with a stronger call to action than liking a page.
Overall, putting Sponsored Stories in the News Feed would give Facebook a way to serve targeted ads to the 350 million users currently accessing the platform through mobile devices without compromising the user experience. This would be an important move for the company should it decide to file for an IPO in the spring, as it would indicate an opportunity to increase revenue.
How Sponsored Stories Would Benefit Games and Apps
When someone uses an app or plays a game on Facebook at least twice or for at least 10 minutes in the last month, it becomes eligible to be a Sponsored Story promoted to a person’s friends, according to advertising materials from Facebook. Developers can pay to display an ad that combines this activity with a thumbnail image and a call to action to play the game. If this type of ad were brought into the mobile News Feed, it would be a huge opportunity for mobile developers. Facebook recently began offering distribution channels for mobile apps, including support for sending users to native iOS apps or directly to a download page within the App Store.
Formerly, it didn’t make much sense for mobile apps to advertise on Facebook because pushing users from the web to a phone is a large barrier to entry and makes it difficult for advertisers to track conversions. But bringing Facebook’s demographic and interest targeting to a mobile environment through Sponsored Stories could be a game changer if click-throughs and conversions can compete with other mobile ad networks.
Sponsored Coupon Stories on the Way?
Last week we spotted Facebook testing a way for pages to post coupons and promote them with premium ads. Clicking to get the coupon sends users an email voucher and generates a story on their Timeline. If Facebook expanded Sponsored Stories to include this type of activity, companies could pay to promote the fact that a user got a coupon. This could work just as well on mobile. Further, it gives brands more control over what they present to consumers since traditional Sponsored Stories do not allow for customized messages.
Without this type of ad, Sponsored Stories on mobile could be a weak offering for pages, since the only possible call to action would be to like a page. Sponsored Stories on the web can direct users to custom tabs that provide greater incentive for users to connect with the brand. Tabs are not accessible on mobile, which could mean lower conversion rates for gaining new fans.
Zuckerberg: ‘Ads Should Be Content’
Facebook has always been careful about how and where it implements ads. Facebook CEO Mark Zuckerberg’s disinclination for advertising is well known, but Sponsored Stories seem to be something he can get behind.
“The basic idea is that ads should be content,” Zuckerberg says in “The Facebook Effect,” which was released before Sponsored Stories were introduced. “They need to be essentially just organic information that people are producing on the site.”
Since Sponsored Stories are derived from users’ friends’ activity, companies cannot simply pay their way into the News Feed unless their content is engaging. Facebook has successfully brought Sponsored Stories into the App Ticker and News Feed Ticker streams without major complaints. Inserting these ads into the mobile News Feed is not likely to result in the type of backlash that could come if Facebook inserted traditional banner or interstitial ads.
And by expanding its ad inventory to include mobile in this way, the company could significantly increase revenue and give credence to the $100 billion valuation some have suggested.