Facebook goes all-in on mobile with dumping of web ad platform

Facebook dropping desktop ad platform to focus on mobile
Facebook dropping desktop ad platform to focus on mobile

Not so long ago, Facebook investors doubted the social network's ability to win on mobile. Now it's practically the only thing that matters.

Facebook said Wednesday that it's doing away with a desktop advertising platform and doubling down on smartphone ads. Facebook Exchange, or FBX, will no longer be available to advertisers starting in November.

Since a troubled IPO in 2012, Facebook has transitioned from a desktop-centric business to a dominant force in mobile, acquiring popular services such as WhatsApp and Instagram along the way. CEO Mark Zuckerberg bet that mobile was the future even when it wasn't clear if there was big money to be made.

How things have changed. In the first quarter, mobile represented 82 percent of total ad revenue, up from 73 percent a year ago. The stock has surged 46 percent in the past year to $117.89 as of Wednesday's close, and Menlo Park, California-based Facebook is now the sixth most valuable U.S. company.

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Facebook is choosing to focus on products like dynamic ads and custom audiences that allow marketers to target customers on smartphones, as more users are tethered to their devices.

Of Facebook's 1.65 billion monthly users, 92 percent are active on mobile, the company said.

Ad types currently available through FBX are display and other formats limited to desktop computers. FBX lacks mobile and video ads.

"Dynamic ads and custom audiences have mobile at their core and are delivering excellent results for businesses," Matt Idema, a Facebook vice president, said in a statement. "This is about giving people more relevant ads and marketers more effective formats, especially in an increasingly mobile world."

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Retargeting, or the promoting of content to consumers based on their known likes, is surging on smartphones.

In 2015, the percentage of marketers retargeting on mobile jumped to 82 percent from 54 percent, according to an industry report from ad-tech start-up AdRoll. The majority of marketers surveyed by AdRoll are already retargeting audiences on mobile, and 87 percent plan to increase their investments in 2016.

"Facebook has become a mobile company over the past two to three years," said Adam Berke, president of San Francisco-based AdRoll, in an interview. "That was one of the key signals there wasn't a future for FBX, and today Facebook is a huge player in mobile marketing."

Berke said the elimination of FBX and a shift in focus toward growing audiences on mobile will "eliminate ambiguity" and make it easier for marketers to reach their users.