Breaking Analysis: Facebook Taking a Timeout on Their Ad Revenue Strategy

It looks like Facebook is putting themselves in time out on their highly-anticipated ad network. The social media giant recently announced that it will halt testing launched earlier this year which allows the site to place its own ads on other developers’ mobile apps. SiliconANGLE News Desk Editor Kristen Nicole compared Facebook’s ad strategy to what Google has done with AdWords, saying Facebook is really trying to expand their internal platform by letting it appear on other developers’ mobile apps. She said, “It’s really an extension of what Facebook has been working on for a couple of years now, and it could be a great revenue opportunity for Facebook if they can get it right.”

Kristen Nicole explained how the proposed ad network was supposed to work with third parties. Although discussions with publishers about running Facebook ads on their mobile websites have been positive, Facebook has also chosen to set these ad projects aside as well. Kristen Nicole felt that this was due to Facebook still needing to work out some things, such as how the revenue split will go and providing their ad partners with as many metrics as possible. Kristen Nicole also discussed other problems Facebook and its potential partners could face. Besides the aforementioned revenue split, there is also the issue that the current ads Facebook displays on its site now don’t necessarily bring the returns that advertisers want to see. So that’s another bullet point Facebook needs to put on its focus list.

When Feledy asked what cues Facebook should be taking from other companies with successful ad strategies, Kristen Nicole responded, “One thing companies like Google have done very well is figure out a way to incentivize advertisers upfront. They’re able to offer a certain amount in returns, regardless of how the advertisers actually perform.” She added that they also need to ensure that their algorithms are running smoothly so that they can provide the best targeting possible. She agreed that Facebook is making the right move in taking a step back and focusing on one thing at a time: “It’s probably a good idea to take a step back, reflect on things, and make sure that when they do roll out with this, they’re doing it the right way. We’ve seen several hiccups from Facebook in the past when it comes to trying to monetize their social network.”

Sources reveal Facebook is in talks to acquire Microsoft’s Atlas ad tech platform, and that the social network has also looked at a few other tech buys, including Aggregate Knowledge, a “media intelligence platform.”  Kristen Nicole views this window shopping as a good sign that Facebook is looking for the right technology. According to AdAge, Facebook may be rolling out Autoplay video ads on its news feed within the next six months. Kristen Nicole speculated that there most likely will not be a way to opt out of receiving these video ads, which are sure to annoy most users.  See the entire segment with Kristin Feledy and Kristen Nicole on the Morning NewsDesk Show.