Facebook Users to See More Ads

Facebook has announced it will step up the amount of advertising displayed to users. It plans to include ads within news feeds and, for the first time, on mobile devices.

Advertising makes up the vast majority of Facebook's revenue, the remainder coming from revenue associated with applications, like Farmville.

However, to date Facebook has not followed the traditional model of offering advertisers a variety of different ad sizes and spaces at different prices.

Instead, it has concentrated on its ability to target ads at users who meet a specific description set by the advertiser. That's because Facebook analyses user posts and knows not just their age, gender and location, but also many of their interests and hobbies.

News Feed to Get Busier, with Ads

One of the changes announced this week is that advertising will no longer be restricted to a separate slot in the right hand column of the page seen when a user logs in.

Instead, some ads will be slotted in the news feed itself, between posts and updates from the user's friends.

These ads won't be placed at random, however; they'll only appear if one of the user's friends has already seen the ad and clicked the "Like" button beside it.

Because the ad will be more visible, the charge for advertising will be considerably more expensive. Whereas current ads cost an average of 22 cents for every 1,000 people who see them, those in the new News Feed are expected to cost around $4 per 1,000 viewers. (Source: forbes.com)

Even so, that doesn't guarantee that someone will click on the ad. It usually takes 1,000 views before one person will even click on an ad, for example, which means that the advertiser will pay up to $4 per click.

Mobile Advertising Becomes Possible

The inclusion of advertisements in the News Feed also solves a longstanding problem for Facebook with mobile devices: to fit the page on the small, narrow screen of a phone, the company's mobile app shows just the News Feed, without any space to the side of it where the current style ads can be placed.

As with computers, the new ads will simply appear between posts in the mobile News Feed. (Source: accuracast.com)

It's been no secret that Facebook wants to build ads into its mobile applications.

In the documentation it filed with regulators to begin the process of issuing shares to the public, it warned that if it didn't improve mobile advertising, its revenue could dwindle if more users accessed their site from mobile devices than computers.