Facebook Offers Developers Advertising, Anonymity Tools

Facebook Inc. (FB) Chief Executive Officer Mark Zuckerberg is seeking to put the world’s biggest social-networking service at the center of the mobile-application universe.

The company introduced new tools, new login options and more ways for developers to make money off of apps. Facebook is opening up its network of 1 million advertisers to software creators who want to run mobile promotions on smartphones and tablets as it pushes to drive revenue from a larger audience.

“This is really the first time that we’re going to help you monetize in a serious way on mobile,” Zuckerberg told developers at the company’s F8 conference in San Francisco yesterday.

Facebook is pitching its mobile tools to developers after figuring out its own business model in the market, Zuckerberg said. Mobile now accounts for more than half of Facebook’s advertising revenue, at $1.3 billion in the latest quarter. Menlo Park, California-based Facebook built the business from almost nothing at the time of its 2012 initial public offering.

As part of the effort, Zuckerberg is revamping the tools offered to developers in response to criticism from users, adding the option of logging into apps anonymously. Some members were concerned that using Facebook to sign into apps gave developers too much access to personal data shared on the network, Zuckerberg said. While he has been a longtime advocate for using real identities online, Zuckerberg said he has now changed his opinion on how consumers should be able to interact with their mobile apps.

Photographer: Erin Lubin/Bloomberg

Mark Zuckerberg, chief executive officer of Facebook Inc., speaks during the Facebook F8 Developers Conference in San Francisco on April 30, 2014. Close

Mark Zuckerberg, chief executive officer of Facebook Inc., speaks during the Facebook... Read More

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Photographer: Erin Lubin/Bloomberg

Mark Zuckerberg, chief executive officer of Facebook Inc., speaks during the Facebook F8 Developers Conference in San Francisco on April 30, 2014.

Anonymous Option

“By giving people more power and control, they’re going to trust all the apps that we build more, and use them more, and that’s positive for everyone,” Zuckerberg said.

The new tool for using an app anonymously lets users try out a new product before sharing their identity and personal information. Another tool, which allows consumers decide line by line which kind of information an application can see, is also designed to encourage users to feel comfortable logging in using their Facebook credentials.

Zuckerberg also said the company is ditching its “move fast and break things” mantra, which encouraged software developers to favor speed over stability to introduce new products or features. Facebook will guarantee developers on its platform that it will support features for at least two years -- responding to a common critique that Facebook’s tweaks causes applications built on top of it to break often.

Mobile Tools

Zuckerberg said the new motto should be, “move fast with stable infra,” referring to infrastructure.

Facebook is at the point where it needs to listen to users and developers to sustain its growth and stand out amid increasing competition, said Brian Blau, an analyst at Gartner Inc.

“They wouldn’t be doing it if they didn’t have to,” Blau said.

Facebook, which developers already depend on for promotions to boost product downloads, told software developers that they won’t have to take on much of the administrative burden for ad campaigns.

“You don’t have to do reporting, you don’t have to do billing, you don’t have to do measurement on the behalf of advertisers,” Deborah Liu, Facebook’s head of platform monetization, said at F8. “It’s all done for you.”

More Revenue

The efforts by Facebook to generate revenue outside its main application will also step up competition with Google Inc. and Twitter Inc., and could translate into a $3 billion opportunity, according to Robert Peck, an analyst at SunTrust Robinson Humphrey Inc. in New York.

“This creates a completely new, very large revenue stream,” he wrote in a note to investors. “This vastly increases Facebook’s limited advertising inventory to virtually unlimited.”

Facebook shares gained 2.8 percent to $59.78 at yesterday’s close in New York. The stock is up 9.4 percent this year.

While Facebook competes with Twitter for users, the smaller rival will also be able to take advantage of Facebook’s initiative. Kevin Weil, head of revenue product at Twitter, said Facebook’s new publisher network can plug into Twitter’s existing mobile-advertising product, MoPub, and will also help Twitter’s ad publishers make more money.

EMarketer Inc. projects Facebook will capture 22 percent of the the $31.5 billion mobile ad market in 2014, up from 18 percent last year. That’s second to Google, whose share is likely to fall to 47 percent from 49 percent, according to EMarketer.

To contact the reporter on this story: Sarah Frier in San Francisco at sfrier1@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Reed Stevenson, Jillian Ward

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