Facebook expands ad business to Zynga's website

The Facebook logo is shown at Facebook headquarters in Palo Alto, California May 26, 2010.

SAN FRANCISCO (Reuters) - Facebook Inc has begun showing ads on Zynga Inc's website, the first time the company has distributed ads beyond the borders of its own website and raising the possibility that Facebook could eventually launch an online advertising network.

"People may now see ads and sponsored stories from Facebook on Zynga.com," said Facebook spokesperson Tucker Bounds. He said that Facebook does not share information about people or advertisers with Zynga, and that Facebook's advertisers do not have any new "targeting criteria."

Asked if Facebook was planning to create a full-fledged online ad network that distributes ads on other sites, Bounds said "we are only showing ads on Zynga right now."

Zynga was not immediately available for comment.

Shares of Facebook, the world's No.1 social network, were up 4.4 percent to $33.25 in mid-afternoon trading on Friday.

Facebook's stock has been under pressure since its initial public offering last month, due in part to concerns about the company's slowing revenue growth.

Facebook made most of its $3.7 billion in revenue last year from ads that appear on its site.

An ad network could significantly increase the reach of Facebook ads, offering an important new source of revenue growth.

(Reporting By Alexei Oreskovic; Editing by Phil Berlowitz)