Facebook has been under tremendous pressure to monetize its massive user base through advertising or any other means ever since it went public. Its stock price has dropped significantly below its IPO price on concerns that it might not be able to monetize its growing mobile user base.
Today, it announced that it will start charging businesses and merchants to run and promote Facebook Offers on its social network. While the service was hitherto completely free, Facebook will now charge businesses at least $5 to promote Facebook offers to its fans and their friends. The cost of running an offer will depend on its reach.
Gokul Rajaram, director of product management for Facebook’s advertising and Pages businesses, said:
“We think this aligns incentives nicely. The best results on Facebook Offers will come from organic distribution plus paid distribution.
The requirement to pay for related ads will focus merchants on who and where they want the offer to reach.”
Facebook’s focus on generating revenue should offer some respite to investors, but its impact on the user experience remains to be seen.