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Eyes on Facebook mobile event as company evolves

Associated Press
FILE- In this Thursday, March 20, photo, Facebook CEO Mark Zuckerberg speaks at Facebook headquarters in Menlo Park, Calif. A research firm expects Facebook’s mobile ad revenue to soar this year, hitting nearly $1 billion a year after the company started to splice ads into its users’ mobile phones and tablets. (AP Photo/Jeff Chiu)
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FILE- In this Thursday, March 20, photo, Facebook CEO Mark Zuckerberg speaks at Facebook headquarters in Menlo Park, Calif. A research firm expects Facebook’s mobile ad revenue to soar this year, hitting nearly $1 billion a year after the company started to splice ads into its users’ mobile phones and tablets. (AP Photo/Jeff Chiu)

NEW YORK (AP) — Facebook is unveiling a mystery product on Thursday that has something to do with Google's Android operating system for mobile devices, a move that coincides with rapid growth among the number of users who access the social network from smartphones and tablet computers.

The company hasn't said what it plans to reveal during the event at its Menlo Park, Calif., headquarters, but speculation has centered on a mobile phone made by HTC Corp. According to media reports, the phone would deeply integrate Facebook into the Android operating system, aiding Facebook in its aim to evolve from its Web-based roots into a "mobile-first" company.

"What Facebook wants is to put itself at the front of the Android user experience for as many Facebook users as possible and make Facebook more elemental to their customers' experience," said Forrester analyst Charles Golvin.

The move could help to attract more mobile advertisers. Though mobile ads were a big concern for Facebook's investors even before the company's initial public offering last May, some of the worry has subsided as the company muscles its way into the market.

Last year, Facebook began showing ads to its mobile audience by shoehorning corporate-sponsored content into users' news feeds, which also include updates from friends and brands they follow. Facebook now faces the challenge of showing people mobile ads without annoying or alienating them.

The mobile advertising market is growing quickly, thanks in large part to Facebook and Twitter, which also entered the space in 2012. Research firm eMarketer expects U.S. mobile ad spending to grow 77 percent this year to $7.29 billion, from $4.11 billion last year.

EMarketer said Wednesday that it expects Facebook Inc. to reap $965 million in U.S. mobile ad revenue in 2013. That's about 2.5 times the $391 million in 2012, the first year that Facebook started showing mobile ads.

Clark Fredricksen, vice president at eMarketer, said it's "tough to speculate" how much effect Thursday's announcement would have on ad revenue.

At the same time, he says "there are some clear reasons why a deeper integration with mobile operating systems and handsets make sense for Facebook. At the end of the day, the more deeply Facebook can engage consumers, no matter what device or operating system or handset," the better.

Such deeper integration could mean Facebook is no longer a stand-alone mobile app but part of the operating system's building blocks. For example, if users who want to take a photo would use Facebook's camera app. If they want to chat, they'd use Facebook's chat service. The invitation to the event, "come see our new home on Android," suggests that Facebook will be prominently featured on a phone's home screen.

Facebook's rival, Google Inc., makes the Android software that Facebook and HTC would be using under the widely speculated scenario. Google makes the software available on an open-source basis, meaning others including rivals are free to adapt it to their needs. Amazon.com Inc. does just that in modifying Android to run its Kindle tablet computers.

Facebook is No. 2 behind Google Inc. when it comes to mobile ads, and it isn't expected to surpass the online search leader any time soon. Google dominates the mobile search market with 93 percent of U.S. mobile search advertising dollars, according to eMarketer. Online music service Pandora Inc. is in third place when it comes to mobile ad dollars, followed by Twitter.

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