Facebook Inc is expanding the advertising system that lets marketers tailor messages to users of the No. 1 social network based on their browsing history, in the company's latest step to refine its ad business.
So far, the system has been used to target graphical display ads on the right side of a Facebook user's page, based on websites visited in the past, such as for products or potential vacation destinations.
The move announced on Tuesday will incorporate this system, called Facebook Exchange, to the ads in Facebook's News Feed.
It ties together two of the most significant innovations that Facebook Inc has made in the past year to its advertising business, which accounts for roughly 84 per cent of the company's revenue.
Marketers last year welcomed the launch of Facebook Exchange as it provided a common online advertising technique long missing on the social network.
Ads that appear directly within the Facebook News Feed are considered crucial to its future business prospects since they can be seen on mobile devices such as smartphones. About two-thirds of Facebook users accessed the site on a mobile device in December.
Facebook said the Facebook Exchange system will initially be available for newsfeed ads that appear on desktop PCs but not on mobile devices.
"Desktop is more in line with what FBX (Facebook Exchange) has been doing effectively in the right hand side. And we also find that desktop is the place where more people convert from seeing direct-response ads," said Facebook spokeswoman Elisabeth Diana.
The company is testing the new service with a limited set of partners, with plans for broader availability in the coming weeks.
Shares of Facebook closed 7 cents higher at $25.21 on Nasdaq.
Mobile ads to push Twitter ad revenue near $1B in 2014
Twitter will generate nearly $1 billion in ad revenue next year due to a surge in mobile advertising on its Web microblogging service, according to a report released on Wednesday.
Mobile ads will account for roughly half of Twitter's advertising revenue this year and will make up more than 60 per cent of the company's ad revenue by 2015 according to research firm eMarketer.
The increasing popularity of Twitter's mobile ads - introduced in March 2012 - caused eMarketer to raise its 2014 ad revenue estimates for Twitter to $950 million, versus its previous estimate of roughly $800 million. Twitters' ad revenue this year will total $582.8 million, according to the report, roughly double what it was in 2012.
Twitter, which allows people to share 140-character messages on its online service, is privately held and does not disclose financial results.
With more than 200 million monthly active users, Twitter is among the Web's most popular social networking services, along with Facebook Inc, and is expected by analysts to float shares to the public within two years.
As consumers increasingly access the Web on smartphones, mobile ads have become increasingly important to the businesses of Web companies such as Facebook and Google Inc. Facebook said in January that its mobile ad revenue doubled from the third quarter to the fourth quarter, representing roughly 23 per cent of its $1.33 billion in fourth-quarter ad revenue.
"Twitter has ultimately benefited from the increased focus on mobile by competitors like Google and Facebook, which have both expanded their own mobile ad offerings and worked to convince advertisers to shift dollars to mobile devices," eMarketer said on Wednesday.
eMarketer said its revenue forecasts are based on analysis of reports that track media buying trends, Twitter usage data and interviews with executives at advertising agencies, online publishers and others.