Blog

24
May

Is that a phone in Zuck’s pocket or is he just happy to IPO?

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Editors Note – Ariel Danna the author of this post takes no responsibility for its title. Kevin Planovsky is responsible for it. Official complaints about the bad humor can be tweeted to @kplanovsky. ;-)
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There has been much speculation about whether or not Facebook has a plan to generate revenue from its mobile site. Of the 800 million active users on Facebook, over half of them are accessing the social network via their mobile devices. Many of these users are in countries that are greatly contributing to the growth of Facebook such as, Chile, Brazil and Turkey. Currently, there are no advertisements displayed on Facebook mobile, but there is no doubt of it’s importance a formidable task for Facebook to implement these changes.

facebook mobile zuckerberg iphone

If Zuck doesn’t implement a plan soon, the company could lose interest of potential investors and suffer other negative consequences.  Do we even need to talk about the buzz surrounding Facebook’s IPO? Last year there were more shipments of smartphones around the world than shipments of personal computers, so by not advertising on mobile, Facebook is ignoring a largely untapped market.  As of now, the majority of Facebook’s revenue comes from the ad space sales. The revenue per user is decreasing, due to a greater increase of daily users compared to the amount of advertisements displayed on the site. As a result, there is greater pressure to monetize mobile and reverse this trend.

In it’s 2011 filing, Facebook made it clear that they did intend “to explore and experiment with mobile advertising.” How they intend to do this was not specified and, in turn, has created much speculation. Certain analysts claim Facebook may simply be holding out and instead focusing on driving more traffic to their mobile site and application before beginning to advertise there. Regardless of its strategy, Facebook has already started paving the way for mobile advertising through Facebook Places. They will be able to leverage geo-targeting in ads, adding yet another targeting capability to their portfolio. Think about how Facebook offers could be used on mobile to redeem coupons and discounts!

Facebook’s attitude towards mobile advertising differs from the two largest players in the mobile advertising market: Google and Apple. Facebook believes that for ad to be successful, they shouldn’t look like ads. Less than 13% of ads, which would be clicked on a computer are clicked on and viewed on a mobile device. In its place, the content should be the ad. Having said that, Facebook now allows for highlighted friend activity to advertise for brands. This can be seen on the mini feed section of Facebook’s home page and looks something like “Jane Smith likes Starbucks.” Brands are to be seen as friends on Facebook, and in doing increase their visibility.

Premium Offers on Facebook are new marketing platforms that can be used to increase visibility. The placement of these premium advertisements can be compared to sponsored tweets on Twitter. The Premium Offers are “mission controlled” starting with a page post and then increasing distribution. Fans of Facebook’s various business pages are seen as great customers and are a contributing reason Facebook’s premium offers has performed well in the past few years of testing, resulting in up to 3 times the ROI compared to a standard Facebook advertisement.

What do you think? Is Facebook making a mistake by waiting to advertise on their mobile properties? And if/when they do introduce mobile ads, will they be received with disapproval and discontent?

-Ariel

Sources:
The New York Times
The Wall Street Journal
GoMo News
Reuters
The Telegraph
The Next Wed
Read Write Web
Techcrunch


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