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Facebook to Show Mobile Ads to Help Boost Sales Before IPO

Facebook Inc., the world’s largest social-networking site, is making its first push into mobile advertising, seeking a new source of revenue ahead of a planned initial public offering this year.

The company said today that it will begin showing ads to the 425 million users of its mobile site. Advertisers will be able to insert marketing messages into the news feed feature for people who access Facebook from wireless handsets, customer marketing director Mike Hoefflinger said today during an event in New York. Facebook also announced other tools designed to help companies interact with customers on its pages.

Facebook, said to seek an IPO valuation of as high as $100 billion, will use mobile advertising to increase sales that almost doubled to $3.71 billion last year. The move would also help Facebook tackle one of the key risks it outlined in regulatory filings, saying that a lack of mobile ads could hamper growth prospects.

“Mobile usage is going through the roof,” said Rebecca Lieb, an analyst at the Altimeter Group in New York. “It will be an ever bigger part of Facebook’s revenue.”

The company said in its IPO prospectus that “if we are unable to successfully implement monetization strategies for our mobile users, our revenue and financial results may be negatively affected.”

Display-Ad Scuffle

In other changes announced today, Facebook is giving businesses more flexibility in posting photos and other content, letting companies interact with potential customers in some of the same ways individual users share information with their friends.

The company is on the lookout for ways to get advertisers to pick Facebook over competing Internet companies, including Google Inc. While Facebook outpaced Yahoo! Inc. to become the biggest U.S. provider of display advertising last year, Google is now vying for the No. 1 spot, according to New York-based EMarketer Inc.

Marketers with Facebook pages will be able to create a “Timeline,” which lets them publish a larger photo and list company milestones in chronological order, the company said. That feature will be available by the end of March, along with new administrative tools the let them track the activity of visitors to these pages.

“Facebook wants brands to make these pages their home on the Web and is giving them the tools and ability to do that,” said Debra Aho Williamson, an analyst at EMarketer.

Users On Way Out

Facebook also said that it would let marketers show a large banner ad to users when they log out of the social network. Those messages have the potential to reach the 105 million users who log out of their Facebook accounts each month, Facebook’s Hoefflinger said today.

Advertising sales rose 69 percent to $3.15 billion last year, making up 85 percent of the total, according to the company’s IPO filing. That came as the number of ads delivered rose 42 percent and the average price per ad climbed 18 percent.

Facebook began offering its “Sponsored Stories” ads last year. With these ads, a marketer pays to be featured in user feeds if the users have signaled an affinity for a brand or business, such as by “liking” it.

Facebook’s planned foray into mobile advertising was initially reported by Bloomberg last year.

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