Facebook's App Centre Today, Ad Network Tomorrow

The App Centre is free, which is great news for consumers. More importantly however, it could signal the beginning of Facebook's mobile strategy - and this will need to be paid for, ultimately, by mobile advertising. Will consumers like this, or loathe it?
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On 9 May, Facebook employee Aaron Brady announced Facebook's App Centre which points mobile users to Facebook-enabled apps, regardless of operating system. On 8 June, it launched. The App Centre is free, which is great news for consumers. More importantly however, it could signal the beginning of Facebook's mobile strategy - and this will need to be paid for, ultimately, by mobile advertising. Will consumers like this, or loathe it?

First, the App Centre itself. It's a simple enough idea: say you really like music and you want to share this passion with friends. One way to do this is spend some time looking for a music app that happens to have Facebook integration. The other way is to start at the Facebook end, so you go to the Facebook App Centre, it tells you that Facebook-enabled Spotify is available for your operating system, and sends you to Google's Play Store, or Apple's App Store - for free. More a showcase than a centre, it is entirely platform-agnostic.

Consumers get what they want no matter what their device. But the App Centre could just be the beginning of Facebook's mobile strategy. And this, in turn, could be the only way consumers will get to stay on Facebook.

Even before its IPO Facebook knew that it must address the biggest risk factors in its S-1 filing, chiefly around mobile advertising revenue. Mobile is strategically important for the company and 85% of Facebook's revenue is dependent on ad revenue. Yet it is only just announcing new mobile monetisation features such as mobile placement of sponsored stories. Even its own mobile app still doesn't display 'real' ads.

So Facebook has a dilemma. It needs to monetise its mobile presence because the world is going mobile. It also needs a way to do this that is acceptable to its users.

Facebook's App Centre could be the answer. By promoting Facebook-enabled apps through the App Centre, it is cultivating an ecosystem of apps pumping data back to Facebook, with Facebook as its beating heart. All it needs is to put the tech in place and it could turn that app network into an ad network. Facebook-enabled apps could then show formats that are much more attuned to mobile than its current offerings such as compelling rich media ads, with astonishing reach and laser targeting. Problem solved.

Another sign of this change is the recent announcement at Apple's Worldwide Developer Conference that Facebook will be integrated (or 'baked') into its next operating system, iOS v6. This will enable users simply to log onto Facebook once, then be permanently connected as they navigate their Apple devices. Again, the Facebook App Centre enables consumers to choose Facebook-driven apps. And again, the greater traffic this points Facebook's way, the more ubiquitous and powerful its app network will be, with tremendous advertising potential.

One thing is certain: if Facebook is going mobile, it must monetise its mobile channel. It's fast approaching one billion users which means it could be powering in excess of a billion devices. Somehow, some way, this will need paying for. The paywall is one approach, but Facebook has writ large on its login page that "It's free and always will be." So it has already cut off that avenue, which means Facebook must fund this through advertising.

Would this intrude on the consumer experience? No more than mobile ads do currently. It would just mean a different network powering the ads displayed. And if that network draws on Facebook's hugely rich social data then the ads could be much more relevant. Facebook knows as much about you as you - and your friends - share with it. So tell it what you want and it will show the right ads, using Facebook's social data about your preferences.

But with the right mobile tech in place, it will also show the right ads for where you are, the device you're using, the time of day, and so on. This is where Facebook needs to focus, because getting mobile advertising right can be tricky.

So consumers need to decide how they feel about advertising. If they want to take Facebook in their pockets when they go out and about, they may need to take its advertising too. The good news is that this advertising could be exactly what they - and Facebook - need. And the strategy to do this started with the App Centre on 8 June.