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Facebook to develop location-based mobile-ad product

US: Facebook Inc. announced that it is working on a location-based mobile-advertising product that will allow companies to target users with real-time data showing their whereabouts.

“Phones can be location-specific so you can start to imagine what the product evolution might look like over time, particularly for retailers,” Carolyn Everson, Facebook’s vice president of global marketing solutions, said in a telephone interview. “We’ve had offers being tested over the last couple of months.”

Facebook, whose shares fell 17 percent from its initial public offering last month, is increasing mobile-ad efforts amid concern ad revenue isn’t keeping pace with users’ migration to smartphones. US mobile-ad spending is expected to grow 80 percent to USD 2.61 billion this year from 2011, when Google Inc. received half of such ad dollars, according to EMarketer Inc.

“The holy grail of advertising is finding people when they are at their closest point to making a purchase,” said Colin Sebastian, an analyst with Robert W. Baird & Co. in San Francisco, who rates Facebook outperform.
 
“Having some location-based element to advertising can be very powerful, and if you combine that with all the personal data Facebook has, the potential is enormous.”

While Facebook hasn’t said when it may roll out a location- based ad product, such ads could take advantage of information shared by almost 1 billion people that use the site.

Facebook, which already allows companies to serve ads based on ZIP code, has come under scrutiny from regulators in the past about how it uses data in advertising. A mobile product could use more specific, real-time data. The company also allows users to share a physical location when posting an update.

“It’s more challenging to get that advertising and have it be accurately targeted at the user, and to do so in a way that doesn’t make the consumer uncomfortable,” said Noah Elkin, a mobile-advertising analyst for EMarketer.

Source: Bloomberg