Facebook Juices Its Mobile Ads

FB bets on new ad targeting strategy

   

Facebook (FB) has gotten lots of traction in the past year by selling install ads for mobile apps. But now the company is pushing the effort even further — with ads displayed after a user has made a download.

This new ad strategy could be another nice driver for revenues. Here’s some more detail: A company will put together a campaign on Facebook’s News Feed. If a user clicks an ad, he or she will go to Apple’s (AAPL) appstore or Google (GOOG) Play to download the app. So far this year, these ads have generated a whopping 145 million installs.

The problem? Well, once someone installs an app, the engagement is pretty tepid. About 66% of the users open the apps 10 or fewer times.

To deal with this, Facebook now allows ads that send a user directly to a part of the app. For example, an ad might flash a promotion for a cheap hotel rate, and a simple tap will direct the user to the bookings tab.

And yes, an app developer also has lots of flexibility for ad campaigns. Facebook allows targeting based on demographics, interests, and even mobile device type.

It’s a smart idea — app developers generally have a tough time keeping users coming back. In fact, given the high costs of user acquisition, churn can be a huge problem.

So with Facebook’s scale and its role as being a key source of app installs, providing after-install ads seems like a no-brainer — and it should have little problem adding millions more to its coffers.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


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