updated 06:00 pm EDT, Fri July 6, 2012
System based on tracking ads on users' phones
In an effort to improve the efficacy of the company's mobile advertising operations, Facebook is said to be developing a type of mobile advertising that looks at the apps on a user's phone and serves ads accordingly. Sources familiar with the social network's plans tell The Wall Street Journal that Facebook would place ads independently of whether or not a user has indicated interest in a particular app. This would represent a shift in strategy for Facebook, which has typically only targeted ads based on brands or companies a user has already Liked.
The new feature is built on technology allowing Facebook to track app popularity and usage. Ads for apps would appear in users' news feeds on their mobile devices, likely linking to Facebook's App Center portal. The company would charge app developers for ad placement and for every time an ad experience leads to an app installation.
The new ad feature is said to be made possible by Facebook Connect, which allows users to log into websites and apps using their Facebook identities. That feature gives Facebook a foothold in a sizable portion of the app and web sectors and funnels information back to the social network on which apps and sites its users like and how often they use them.
Apps are said to account for about half of all ads on Facebook already, as a number of large brands use them to advertise their products. Facebook is also said to be trying to figure out a way to track what users do when using an app and target ads accordingly.
The new feature seems almost certain to bring new protests from privacy advocates. The social network already faces a privacy lawsuit from users alleging it tracked their Internet usage without their consent. Facebook is expected to discuss the new ad product during the company's earnings call later this month, and the privacy concerns will likely be taken up at that time.