Facebook Makes a Move on Mobile Ads

Businesses can buy 'sponsored stories' for mobile app

While mobile traffic is growing by leaps and bounds, Facebook (NASDAQ:FB) hasn’t been able to figure out how to make a business from it. In fact, this issue is one of the largest factors in the company’s stock plunge since its IPO.

But now, Facebook finally is taking action to turn that around.

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According to a report in The Wall Street Journal, Facebook now will allow advertisers to pay for “sponsored stories” — essentially user messages about a brand — on its mobile app.

Advertisers previously could only do this as a part of a broader advertising package, which included both desktop and mobile platforms. However, Facebook has realized that some businesses prefer to focus solely on mobile, and forcing the dual approach might have resulted in lost business.

Considering how important Facebook is becoming to brand awareness — even if not through conventional ads — the new approach should get traction. Just don’t expect a huge rush of “sponsored story” buys. Mobile advertising still is in the experimental phase, so it’s difficult to tell what types of formats will work.

But the immediate takeaway should be a little bit of optimism that Facebook appears to be getting serious about monetization.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.


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