Last week, Facebook revealed that half of its 850 million users log in to the company’s mobile products. The amount of money made on those users? Zilch, because Facebook doesn’t run ads on its mobile apps.
Funny thing about investors—they don’t like it when you fail to monetize a user base of more than 400 million. That’s why Facebook is changing its tune and planning to run mobile ads as early as March, according to the Financial Times.
(PHOTOS: Life Inside Facebook Headquarters)
The paper quotes “several people familiar with Facebook’s planning” who say that Facebook is already talking with advertising agencies about creating sponsored stories that will appear in people’s news feeds. The plan is to get it up and running before May when Facebook is expected to go public.
Despite the impressive numbers in Facebook’s IPO filing ($3.71 billion in revenue, $1 billion in net income), the fact that the company wasn’t making any money on its popular mobile products and that 12% of its revenue came from its relationship with Zynga was cause for alarm for many financial analysts.
Mobile ads are difficult because the visual real estate on a smartphone screen is much more scarce than on a laptop or desktop screen. Twitter tried and failed to monetize its mobile product with the short-lived QuickBar, so it’ll be interesting to see how Facebook’s more than 400 million mobile users react to ads on their once pristine smartphone screens.