Facebook Testing Third Party 'Mobile Ad Network'

Facebook is testing mobile ads on third party sites, according to two published reports. Right now this is a "small" beta test and an extension with what Facebook has been doing with Zynga for several months. According to a statement provided to AdExchanger:

“We are going to begin showing some ads on mobile outside of Facebook,” the rep said. “We’ve been showing ads off of Facebook on Zynga for a few months, and we think showing ads on other sites outside of Facebook is another way to show people relevant ads and let them discover new apps.”

Facebook is using various mobile ad exchanges to serve ads (IAB standard units) in apps or on mobile websites. TechCrunch offers a nice explanation of how the Facebook-user data gets to the ad exchange and ultimately to the third party sites and apps:

On the back end, advertisers set a bid they’re willing to pay Facebook to reach a certain demographic of users. Meanwhile, Facebook syncs its anonymous user IDs with several mobile ad exchanges. When a Facebook user visits one the apps or sites where these exchanges have placements, the exchange instantly sends Facebook that user’s ID and asks if there’s a bid set to target them. If so, Facebook pays the ad exchange some portion of the bid, and the ad is shown to the user.

It appears that most of the targeting will be demographic. It doesn't appear that location will be an element of the targeting at this point. 

For now it appears that Facebook won't have direct relationships with mobile publishers and developers. However it will own the advertiser relationships. If all goes well it this would offer Facebook a way to generate additional mobile ad revenue without compromising its Facebook mobile user experience with irrelevant ads.