Wednesday, September 19, 2012

Is Facebook Inc (NASDAQ:FB) Developing its own Ad Network?

Speculations and theories about Facebook Inc(NASDAQ:FB) developing its own advertising networking by moving beyond its own site, has been around for quite some time. But the company announced on Tuesday that it is testing the idea of giving out Facebook ads on mobile apps and Web sites outside of Facebook, which is likely to feed the fire.

Currently, Facebook is linked with some ad exchanges that are related to publishers, who will then market those Facebook ads to third party websites and apps. The ads will be similar to those seen on the social networking site, but will be optimized for the mobile web for the apps that already display ads.

Mark Zuckerburg has previously stated that the entire structure of the company was being revamped to give priority to the mobile platform because a major portion of users are now accessing the site via apps or on the mobile Web. Another addition to Facebook recently is an update to its promoted posts. Small business and app developers can buy ads for their products directly from a smartphone.

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Facebook can also venture into another market that is booming with potential, but is yet to be explored – third-party app developers, via their mobile ads setup. If there is a Facebook off-site mobile ad for a third-party app, it can redirect users who click on it to Apple’s App Store or Google Play, which will allow them to download apps. Developers can easily direct users to their apps rather than waiting for the app to appear in the organic results in the News Feed.

Facebook can effectively use their enormous database by targeting the right ads to the relevant people, which makes the job quite easy for the ad exchanges. Rest assured, Facebook values the privacy of users and only makes use of a certain portion of the data, while keeping sensitive information anonymous.

Facebook had put up their very first ads on Zynga.com’s in-game pages, which led to theory about the social network developing its own ad network. But even so, it is still in the testing phase and a whole lot of details need to be worked out before anything can be confirmed.

Shares of FB soared 6.50% to $23.29 on Wednesday.

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