Facebook recently announced plans to roll out a mobile ad network.

While we’ll have to wait till the F8 conference later this month for full details, it’s likely to be a larger scale version of the small test they ran in late January when they started showing ads in third-party mobile apps with a select group of advertisers. The big idea here is to combine the targeting of Facebook data with the reach of thousands and perhaps millions of other mobile apps used by consumers around the world.

With this move, Facebook squares off with Twitter and other social platforms in a battle to dominate the mobile ad network market.

The New Battleground

Mobile is huge for both Twitter and Facebook both in terms of usage and revenue. In Q4 of 2013, both Twitter and Facebook saw about three-quarters of their monthly active users logging in via mobile (184mm and 912mm respectively). However in terms of revenue, Twitter gets 75% of its total ad revenue from mobile, while for Facebook, mobile ads earn 53 percent of its total ad revenue ($181mm and $1,373mm respectively)

Both also have invested in mobile acquisitions. In late 2013, Twitter bought MoPub, a mobile ad network for $350mm. In their annual report, they describe plans to extend “advertising across the mobile ecosystem through the MoPub advertising exchange” and add real-time bidding into Twitter’s native ad platform. In fact, it would be interesting to know how much of Twitters mobile ad revenue is from MoPub versus ads directly on their platform.

Facebook is of course known for it’s whopping $19B acquisition of the massive mobile messaging platform, WhatsApp. More interestingly though, is their acquisition of Parse, a Y Combinator company that offers a powerful and simple backend infrastructure for developers including push notification, user management, and data storage. By offering tools that directly help developers build mobile applications, Facebook has a deeper connection with that application’s users, and thus offer more sophisticated targeting for advertisers.

Broadening Revenue Streams

Currently, social platforms make the majority of their ad revenue displaying ads directly on their own sites and apps. By creating a mobile ad network, Facebook and Twitter can take deep knowledge of their users and show ads on third party mobile apps and sites. If they succeed, it could be a massive revenue opportunity to monetize highly engaged social users who don’t engage with ads directly on the platform. Of course, revenue will also depends on how well brands and agencies learn to fully use these new ad options.

Tumblr, bought by Yahoo in May 2013 for $1.1B, also has a big stake in mobile, with 1 in 2 active users accessing the platform via mobile. They too are considering this move. It’s head of product told the Wall Street Journal in March that to in order to drive revenues, Tumblr could “launch an ad network to distribute its highly visual and social ads to other sites, beginning with Yahoo and others it owns.”

The Old Becomes New

The idea of extending ads off of the main platform is not new. Google, the Godzilla of the online advertising, started first by monetizing via text ads alongside search results in 2000. AdWords is still their #1 source of revenue, clocking in $10.6 B in the fourth quarter of 2013. But three years after AdWords, Google unveiled the online ad marketplace that eventually came to be known as AdSense, which contributed $3.52 B in the same quarter. Through cookies and other user data, Google offered targeted audiences to advertisers, a lucrative revenue source and something Facebook and Twitter no doubt hope to replicate with their mobile ad networks

At Percolate, we’ve spoken before about the impact mobile has had on social. Facebook’s continued push toward a mobile ad network only highlights how much smartphone and tablet usage has transformed our internet usage. For brands, these moves send a clear signal: the majority of social activity now happens on mobile, and marketers need to be thinking hard about their mobile reach and engagement strategy.