Last updated: October 1, 2013 11:49 pm

Facebook expands mobile ad options

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A smartphone user shows the Facebook application on his phone©Reuters

Facebook is expanding its offering of mobile app advertisements as the social network looks to exploit its new-found momentum in mobile advertising.

The company has added new features so developers can buy ads to encourage users to return to an app they have previously downloaded.

About two-thirds of those who download mobile apps open them between one and 10 times, according to a study by Localytics, a mobile research company contracted by Facebook.

“Businesses are faced with the challenge of getting people to return and remain active within their app,” Facebook said.

Facebook first launched “mobile app install ads” in August 2012. The company is paid when users click on the ads, which take them to the Apple or Google store to download an app.

The number of advertisers buying these types of ads has almost tripled in the first half of 2013, from 3,000 in the first quarter to 8,400 in the second.

Although revenues from these products are a small part of the company’s overall ad sales, they could represent a “key new source of ongoing revenue growth”, according to a research note from Brian Wieser, an analyst with Pivotal Research.

He said most sales of ads for the news feed on the mobile app were to existing advertisers who were shifting their spending from the desktop version of Facebook.

By contrast, the “install” ads for the mobile app attracted advertisers who had not bought Facebook ads before.

“Sounds like there’s a clear opportunity for Facebook to collect more revenue from the app developer,” Mr Wieser said. “Although it could also be the case that those app developers that weren’t successful in hooking you the first time, maybe there’s a reason.”

Facebook’s primary customers for these ads have been the makers of mobile games and digital media, such as Spotify, the music streaming service. The company is focusing on attracting more varied customers, particularly from commerce and the banking industry.

Retail and ecommerce companies such as Target, eBay and HotelTonight, an online booking site, have used the ads to encourage downloads of their shopping apps. The objective of these ads is to entice consumers back to the app for a product or sale promotion.

Deb Liu, Facebook’s director of platform monetisation, imagines banks using the ads to draw customers back to a mobile banking app, perhaps encouraging them to use a new feature.

“How do you tell app users you have this?” she said. “You could include it in a statement, or you could get it in front of them today.”

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