Facebook Mobile Ads Not Likely to Be a Distraction

When Facebook filed for its IPO last week, the documents revealed that the social network had 425 million mobile users in 2011—that’s slightly more than half of its total monthly active users.

More surprising, perhaps, is that with all the money it makes, Facebook also admitted in its filing that it had yet to “generate any meaningful revenue” from this substantial subset of mobile users, citing it as a risk factor:

“If users continue to increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, our revenue and financial results may be negatively affected.”

But now it appears that Facebook is readying itself to tackle mobile advertising sooner than many first thought.

According to a report by the Financial Times, people familiar with Facebook’s planning say that it has “already discussed proposals” with ad agencies for displaying a type of ad called “featured stories” in the News Feed.

Featured stories, which were originally called “sponsored stories,” have already hit News Feeds. They’re designed to look a lot like the other posts that appear in your News Feed, so you might not have even noticed them.

The Financial Times reports that these types of ads will likely launch in the mobile version in early March, a couple months before Facebook’s IPO, which is widely expected in May.

It’s no secret, though, that Facebook users hate change. And if reaction to this inevitable announcement mirrors those of other unpopular decisions, remember a few things:

The Facebook apps are currently free. In the SEC filing, Facebook stated that according to a third-party report published in September 2010, the Facebook app was the most frequently downloaded app across all major smartphone platforms in the U.S. As the mobile market grows, Facebook can expect to capitalize big-time on mobile.

With mobile apps, a business might generally offer two types: free and paid. Free ones tend to include advertisements, while paid apps may remove ads and sometimes include new features. Right now, all Facebook apps are free, so including advertisements is the natural next step and on par with other apps. Facebook could, of course, offer a paid app later that would remove advertisements.

Thinking beyond the banner ad. A PCWorld story points out that the annoying banner ads, which have been the go-to ad for sometime now, have lower click-through rates on a mobile device than on a computer.

As a result, we can probably expect Facebook to experiment with new ad positions and sizes, in addition to the sponsored stories we could see in March.

Just as the sponsored stories in News Feeds haven’t caused a huge disruption in Facebook users’ lives—some probably haven’t even recognized them—I don’t anticipate Facebook’s mobile ads will, either. Mobile advertising is a natural and necessary progression for Facebook, especially with its looming accountability to shareholders.

What do you think about Facebook mobile ads? Cast your vote in our poll below.