Facebook to Make Businesses Pay for Offers Discount Service

Facebook Inc. (FB), owner of the world’s largest social network, will begin requiring business clients that use its Offers service to purchase advertisements, seeking to generate sales from a feature that had been free.

Businesses that take advantage of Offers, which include discounts on products and services, will now have to create an ad to place them, the company said in an e-mailed statement. The change should make Offers more relevant to users when they see them in their news feeds on Facebook’s website.

“Businesses will still be able to run Offers for a minimal budget, but ads must be created in order for people to see Offers in their news feeds,” Menlo Park, California-based Facebook said in the statement.

Facebook is under pressure from investors to wring more advertising revenue from its more than 950 million users as it grapples with mounting competition from rivals such as Google Inc. (GOOG) and Yahoo! Inc. (YHOO) Facebook is expected to lose its No. 1 ranking for display-based advertising to Google in the U.S. this year, according to EMarketer Inc.

As part of the changes to Offers, Facebook also will let businesses add a bar code or some other type of code, the company said. This will enable businesses to better track results of the Offers, which Facebook debuted earlier this year.

Facebook declined 3 percent to $22.59 at the close in New York. The stock has dropped 41 percent since Facebook sold shares for $38 apiece in an initial public offering in May.

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net;

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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