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Lots of people have wanted Facebook to build an ad network for a long time.

Here it comes. Facebook will take the wraps off its plans for a mobile ad network at its “F8″ developer conference in San Francisco at the end of the month, according to multiple sources familiar with the matter.

Facebook will pitch the ads to publishers and developers as a way to leverage the social network’s vast database of user information for better ad targeting. And Facebook wins by expanding its ad reach — now it can make money from its billion-plus users even when they’re not on Facebook’s own properties.

Facebook declined to comment.

This shouldn’t be a shocker. People inside and outside of Facebook have wanted the company to build an ad network for years, and it has dabbled in fits and starts. In January, Facebook announced that it was experimenting with ways to sell ads on other people’s apps, and describing the test as a “like a mobile ad network.”

In the past, Facebook stayed away from building out an ad network because it was busy trying to sell ads on its own Web site. And it couldn’t contemplate a mobile ad network until recently because it didn’t have any mobile ads of its own.

But that has changed dramatically in the last two years. In the last three months of 2013, mobile ads generated $1.24 billion for Facebook —  more than half the company’s overall ad revenue. And we’ll get another peek at how well that business is doing when Facebook reports its first-quarter earnings later this week.

A good chunk of that — perhaps 50 percent or more — comes from “app-install” ads, which prompt users to download apps or re-engage with apps they’ve already installed. The ad product was initially an afterthought in Facebook’s mobile ad strategy, led by Facebook engineering and platform leader Mike Vernal, who at one point only had a single engineer working on the project.

Vernal has since been promoted to a Vice President of Engineering in charge of platform and other areas, and is now on the “M-Team” — Mark Zuckerberg’s inner circle of trusted advisors, according to multiple sources.

Facebook won’t be playing in the space alone. The company will take on Google’s existing AdMob mobile network, as well as smaller players like Millennial Media. And now Twitter is entering the fray, by linking its MoPub ad network to its ad buying platform, and rolling out  app install ads of its own.

Peter Kafka contributed additional reporting.



1 comments
RomaMan
RomaMan

Am I the only one that doesn't think they're ready for this? Facebook has a size advantage in terms of its reach to mobile consumers, but competing with Google and Airpush and Millennial Media? Airpush and MM do more innovating before breakfast than FB does in a month. I haven't seen enough creative muscle from FB in mobile yet for me to think they they can do this. What they should have done is acquire a top ad network, not try to build one. Overconfidence will kill them in this game. I hope they know what they're doing.

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