In a reflection of the key role that location plays in mobile, Facebook is reportedly close to paying up to $1 billion to acquire Waze, a navigation application that lets drivers build and use live maps, as well as browse real-time traffic updates and turn-by-turn directions.

If the deal takes place, it would be Facebook?s second $1 billion deal for a mobile app following the social network?s purchase of photo-sharing app Instagram for a similar amount last year. Facebook has been intently focused on fleshing out its mobile strategy over the past year, with a strong focus on delivering more relevant ads.

?There is a huge opportunity to leverage Waze's GPS technology for better location-based mobile advertising and optimizing Facebook's local search results,? said Raj Aggarwal, CEO of Localytics, Boston. ?Better local advertising is a potential, huge opportunity that many are trying to address, and crowdsourced mapping with Facebook's Social Graph, Social Search and advertising capabilities make a very compelling combination.

?Marketers should really start to think more about Facebook from a local search and local mobile advertising point of view, given Facebook's anticipated enhanced location intelligence and mobile offerings from this acquisition,? he said.

?Among the customers for Localytics? app analytics and marketing services, we see increasing demand for a better understanding of where mobile users are and how and when they engage with their apps. A Facebook and Waze combination will motivate others to upgrade their capabilities.?

Rich ad experiences
The news follows closely on the heels of Facebook?s acquisition of Parse for a reported $85 million. Parse automates certain parts of app development, bringing the social network closer to mobile app developers and opening up new opportunities to build mobile ad inventory (see story).

Mobile has been a big focus for Facebook as its user base increasingly migrates from desktop to mobile to interact with the social network.

Following a rock start to its mobile strategy last year, Facebook?s fortunes here have taken a decided turn for the better so far this year. The company recently reported that during the first quarter of 2013, ad revenues from mobile reached 30 percent of total ad revenues, up from 23 percent in the fourth quarter of 2012 and 14 percent in the third quarter.

Facebook?s mobile user base continues to grow, pointing to the importance of a strong mobile advertising offering. In the first quarter, the number of Facebook mobile monthly active users totaled 751 million, an increase of 54 percent year-over-year.

Despite these gains, Facebook like others in the mobile advertising space is still struggling with how to deliver rich advertising experiences to mobile users.

Local relevancy
Facebook chief financial officer David Ebersam said during a conference call with analysts to discuss the first quarter results that one of the big opportunities right now is to try to make mobile advertising higher quality and more relevant.

Making its mobile ads more relevant is an ongoing focus for Facebook. During the first quarter, Facebook introduced new advertising products such as Lookalike Audiences, Managed Custom Audiences and Partner Categories, which help marketers improve their targeting capabilities on Facebook, including on mobile.

Location is also an important way to make advertising more relevant, with targeting mobile based on location information something that marketers are looking for.

Mobile local advertising spend will reach $1.9 billion in 2013 and is expected to surpass online local advertising spend by 2017, according to a recent report from BIA/Kelsey (see story).

The report also points to the significant role that national advertisers are playing in driving the growth of local mobile advertising, accounting for 85 percent of the spend. National advertisers? role in mobile local advertising is much bigger than in any other area of local media.

?With the Instagram acquisition last year, it's clear that Facebook is very focused on mobile,? Mr. Aggarwal said. ?Mobile ads are nearly a quarter of their revenue.

?Another 45 million mobile users from a Waze acquisition would clearly help augment that,? he said. ?Facebook's mobile users now exceed their desktop users, and investments in Facebook Home and Instagram are also evidence of Facebook's increasing focus on mobile.

?If the rumors are true, then acquiring Waze adds another great mobile app to Facebook's portfolio ? a crowdsourced app that will drive more engagement via mobile and has clear tie-ins with Social Graph and Social Search.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York