Facebook’s Mobility Challenge
Facebook has announced its inability to monetize the more than 400 facebook members who access the site via a mobile device. As part of their public offering facebook had to reveal risks that the company faces in the upcoming years and one that they highlighted is their inability to generate meaningful revenue through mobile devices. Overall spending on mobile advertising in the US is expected to jump 80% next year to over $2.6 billion and facebook needs to find a way to capture a large chunk of that spend if they want to continue to be a powerhouse in the tech industry. Although a large number, the mobile advertising industry is still very immature when compared to TV, print and online advertising. The inability to generate significant revenue on mobile advertising is not unique to facebook as other large companies are struggling as well. Although facebook has listed their inability to generate significant revenue from mobile devices as a risk many believe that facebook is deliberately delaying ads on mobile devices, similar to their strategy with the traditional facebook website.
This article brings up several interesting points about the mobile advertising market. This market is poised to grow over 80% in the upcoming year; however marketers still do not know how to fully capitalize on this market. According to the article and several other experts consumers are not yet ready for advertising to appear on their mobile screen. In most cases mobile screens are much smaller than those on traditional PC’s and consumers do not want to see clutter on their phones and they do not want anything to jeopardize the speed at which they pull up content on their mobile devices. Google is currently the leader in mobile advertising however they are still not fully capitalizing on the vast potential that this market offers. Another interesting point that this article brings up is the other ways that companies like facebook can make money on mobile devices. Currently Google allows developers to great apps and games and offer them on their android platform free of charge while companies like Apple and facebook charge a percentage of app sales from each developer. This is one reason why facebook was reluctant to create and Ipad app for facebook because now facebook needs to share revenue from faecbook apps with Apple.
With the current model and fight for dollars in the mobile market there are several battles going on within the war. For instance many believe that facebook deliberately created their Ipad app with bugs so their members will just access facebook via the web directly versus the apple app. This would be a very interesting strategy especially because facebook openly admits that over half of their users access their website via a mobile device. It is obvious that there is still great potential to be reached in the mobile market and facebook is testing models with streaming advertisements that are attached to a member’s friend. The question that still remains is facebook’s current mobile strategy one that will make this segment profitable? Facebook must make a lot of strategy decisions in the upcoming months and two of the most critical strategies will be how much resources to devote to mobile and how to attack this segment. If you were facebook how would you attack this segment?
You can access this article at the link below.