Facebook is unveiling a new Android product Thursday, a move that comes as a fast-growing number of its 1.06 billion users access it on smartphones and tablet computers.
Advertisers are not far behind. Though mobile ads have been a big concern for Facebook's investors since before the company's initial public offering last May, some of that worry has subsided as Facebook began muscling its way into the market.
Last year, the company began showing ads to its mobile audience by splicing corporate sponsorships and content into users' news feeds, which also includes updates from friends and brands they follow. Among the challenges Facebook faces now is showing people mobile ads without annoying or alienating them.
The mobile advertisement market is growing quickly. That's 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.
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As for Thursday's event at the company's Menlo Park, Calif., headquarters, speculation has centered on a mobile phone, made by HTC Corp., that deeply integrates Facebook into the Android operating system. The move comes as Facebook works to evolve from its Web-based roots to a "mobile-first" company, as its mantra goes.
"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.
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.
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 advertisements, 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.
Facebook's event was being held at its headquarters in Menlo Park, Calif.
Here's a running account of Facebook's event, presented in reverse chronological order. All times are PDT.
Presenters include CEO Mark Zuckerberg; Adam Mosseri, director of products; Joey Flynn, product designer. Also appearing were HTC's CEO and AT&T's head of wireless.
While people will be able to install Home themselves, some phone makers will build Home into the phones. HTC Corp. is releasing a phone called First. It will come in four colors -- red, light blue, white and black. It will run on AT&T Inc.'s 4G LTE cellular network and go on sale April 12 for $100, with advance orders to begin Thursday. A two-year contract requirement is likely.
To get Home, simply go to Google's online Play store when it's available. Those with Facebook apps on the phone already will get a prompt to download it. The software will be updated with new features monthly.
It will be available April 12 on certain phones initially.
Facebook isn't making Home for tablet devices for several months, though.
Zuckerberg tells the audience, "We are really proud of Home and we are excited to get (it) into your hands. We think this is the best version of Facebook there is."
Flynn unveils a feature called chat heads. The idea is to let you communicate with your friends from that home screen, without needing to open an app. You can chat with multiple people at once that way.
Mosseri describes one of the main features of the new service. It's called cover feed.
He notes that when people look at their phones now, they typically see a clock and perhaps the snippet of an email. That will change if you have the Home service activated. As soon as you turn on your phone, you'll see photos. You can swipe from one to the next from the home screen.
The new service is called Home. Pictures from your Facebook news feed would take up the entire display screen. Zuckerberg says you'll be seeing the world through
people rather than apps.
He gives an example of standing in line at a store and looking down at the phone to see photos of friends and family. It'll be possible to flip through the items. If there's something you like, just double tap on it to "like" it. You can also add comments from the home screen.
With this, Facebook doesn't believe you'll need to go to the Facebook app any more.
Zuckerberg says Facebook isn't building a Facebook phone, saying a Facebook-centered device might sell 10 million to 20 million units at best. Rather, it's building on the existing Android system to bring this experience to a wider group of Android users.
Zuckerberg talks about a new way to approach Facebook on phones.
He asks, "Why do we need to go into all the apps in the first place to see what is going on with the people we care about?" Better, he says, is to have that experience come right to the home screen, so you're always knowing what is going on around you.
He makes a comparison to the company's news feed feature, which brought friends' posts to a centralized place and reduced the need for people to check their friends' profile pages one by one.
Zuckerberg walks on stage and addresses the rumors head on: "Today, we're finally going to talk about that Facebook phone."
He then adds that more specifically, Facebook will talk about turning the Android phone into a simple, social device.