Now that Facebook's revenue sources are front and center of the social media world, the company will be looking to optimize all aspects of the business prior to its Initial Public Offering (IPO). As part of an increased focus on revenue strategies, Facebook will be injecting mobile ads into its smartphone app within the next few weeks.
In the IPO Prospectus that Facebook filled out last week, the company declared all risks associated with the business. One of those risks included the company's mobile products. In the Securities and Exchange Commission (SEC) filing, the company said, Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results, and also that, Facebook user growth and engagement on mobile devices depend upon effective operation with mobile operating systems, networks, and standards that we do not control.
In order to mitigate that risk, Facebook will be introducing ads on the mobile version of the social network. The company will inject advertisements into users News Feed that look similar to stories their friends would post. Advertisements will be labeled featured stories, much like the advertisements on Twitter. There won't be any way to block the new advertisements.
Facebook's IPO Prospectus revealed that the company had more that 425 million mobile monthly active users in December 2011. Facebook states in the IPO filing that it believes the future of usage depends largely on mobile platforms: We believe that people around the world will continue to increase their use of Facebook from mobile devices, and that some of this mobile usage has been and will continue to be a substitute for use of Facebook through personal computers, says the company in the filing.
There's likely to be a severe backlash when the ads begin to roll out, as there always is with Facebook revamps; however, it's unlikely that people will be frustrated enough to leave the social network. The company currently has more than 800 million users, making it the largest social network in the world.