Peter Kafka

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Facebook Stops Its Long-Awaited Ad Network Before It Starts (For Now)

facebook-IPOLooks like we’ll have to wait a bit longer to see Facebook’s much-anticipated ad network.

The social giant is putting the brakes on a test it launched earlier this year that let it place its own ads on other developer’s mobile apps.

And while it has also been talking to publishers about running Facebook ads on their mobile Web sites, sources say those discussions have now been back-burnered as well.

The upshot is that plans to launch the equivalent of Google’s AdSense network, which has generated significant income for the search giant, won’t be showing up in the next few months.

Facebook announced in September that it would run its ads on third-party apps. But those efforts will end this month, says spokesman Brandon McCormick.

Here’s his statement, via email: “We are pausing our mobile ads test off of Facebook. While the results we have seen and the feedback from partners has been positive, our focus is on scaling ads in mobile news feed before ads off of Facebook. We have learned a lot from this test that will be useful in the future.”

Facebook executives, led by business development director David Fisch, have also been talking to major publishers this fall about running Facebook ads on their Web sites, with an emphasis on mobile Web sites. McCormick wouldn’t comment on those discussions, but people familiar with the talks say those conversations have also paused.

The major problem for both Facebook and its potential partners, sources said, is concern that Facebook isn’t ready to deliver ads on external sites that produce significant value for either the network or its partners. That’s at least in part a reflection of the fact that the ads on Facebook’s own site still command relatively low rates.

In the past, other ad networks, including Google, have gotten traction by guaranteeing publishers a certain amount of revenue, regardless of their ads’ performance. But sources say Facebook hasn’t proposed that yet. Instead, the company has discussed a “generous” revenue split, says a publisher who has talked to Facebook about running the company’s ads.

Facebook-watchers have assumed for years that the company would eventually launch an ad network that would use the data the company collects on its 1 billion users.

And one day they will probably be right. In addition to the mobile app ads, Facebook has also run its ads on Zynga.com, a move the company also described as a test. And last month it made changes in its terms of service that observers predicted would also lead to an external ad network.

Facebook is deep in talks to acquire Microsoft’s Atlas ad tech platform, which might also help launch a network one day, and is kicking the tires on other ad tech buys as well; sources said it has looked at “media intelligence platform” Aggregate Knowledge.

 


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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work