For all the hoopla made over Facebook's (NASDAQ:FB) Instant Articles -- the new feature that hosts publisher's content on Facebook's servers -- not much has happened since its launch. Only one new Instant Article has been published since the launch date in the middle of May.
Facebook is hoping advertisers will show more interest in the format than publishers, after unveiling plans to include similar features in an upcoming ad format. Speaking at the Cannes Lions International Festival of Creativity, Facebook Chief Product Officer Chris Cox showed a mockup of the potential ad format to advertisers last week. The new ad unit has strong potential to produce better conversions for advertisers, leading to higher average ad prices at Facebook.
It's all about sales
It's easy to understand why publishers are hesitant to place their content in the hands of Facebook. Despite the favorable terms Facebook is providing them, they're giving up a certain amount of control to Facebook. If publishers become reliant on Instant Articles for traffic and ad revenue and Facebook suddenly changes the terms, they're put in a very bad position.
For advertisers, however, it's all about converting ad impressions into sales. Like Instant Articles, links from Facebook's new ad units will preload in the background so a click loads the sales page nearly instantaneously. Advertisers can include dynamic media like videos or images that rotate with the swipe of a finger, and they can craft an ad that feels like a native website or app just for that product.
Facebook could incorporate a buy button for advertisers using the format, enabling users to learn about the product and make a purchasing decision all without really leaving Facebook. The mock-up showed a link to directions to the nearest store and a link to the online store. Business Insider reports that Facebook has been working with Michael Kors on an ad that would let users touch, swipe, and pinch the ad to see one of the brand's watches from all angles.
Facebook was talking with advertisers in Cannes to get their feedback before testing the new ad unit. Facebook took a similar approach with Instant Articles to ensure that it would be able to sign on some early partners by catering to their needs. As mentioned, that hasn't exactly produced outstanding results.
However, Facebook likely won't have as much trouble convincing advertisers to invest in the new format if it can produce the product they want and produce better sales results than its other ad units. Additionally, advertisers may see much more benefit from the decreased abandonment rates associated with faster load times compared to publishers.
A focus on mobile
What's particularly interesting about the new ad format is that it's designed for mobile devices. With features like images that rotate with a swipe and other gesture responses, Facebook is trying to reinvent a product previously adapted from its desktop counterpart. The new ad units aim to take advantage of the unique capabilities of mobile devices and how people are used to interacting with them.
That's important for Facebook because nearly three-quarters of its ad revenue came from mobile devices last quarter. The company sports nearly 1.25 billion monthly active users on mobile, and 581 million of those users access the social network strictly through their mobile device. Mobile-only users now account for more than 40% of total users, up from 17% two years ago.
Maximizing its mobile ad prices is paramount to Facebook's continued success going forward, especially considering Facebook expects to add more mobile-only users than desktop users. Working with advertisers on a mobile-first ad unit should help the company increase its average revenue per mobile user.
Facebook didn't announce when we might see these new ad units, but considering it's actively talking with advertisers, we should see them rather soon.