What Will Facebook’s Mobile Advertising Future Look Like?
The other week at TechCrunch Disrupt, Facebook CEO Mark Zuckerberg stated that all he thinks about is mobile. Despite the fact that mobile advertising only represents 2% of Facebook’s 2012 revenue, it’s obvious that it’s going to be a huge part of Facebook’s future revenue model. eMarketer projects Facebook’s mobile ad revenue to jump to $629 million by 2014, surpassing Twitter. But that’s in 2014; here’s why we’re bullish on Facebook’s mobile ads in the long-term, but bearish in the short-term.
Analysts can prognosticate all day about Facebook’s future mobile ad revenue, but what does this mean for your company and if you should be using Facebook mobile ads? There are whispers that Facebook’s mobile ads aren’t performing well, but let’s look at the purpose of Facebook’s mobile ads to get a better idea of their value to your company.
Over these past few months, Facebook has been unveiling new mobile ad units for advertisers. These ads focus on getting brands more Likes right from inside a user’s feed. This is probably the best method to integrate mobile ads into the Facebook mobile experience; especially since Zuckerberg and his team probably won’t dare put traditional banner ads in the Facebook app experience. But Facebook’s ads continue to focus around Liking fan pages, which is why in the short term, you shouldn’t be putting your budget toward Facebook’s mobile ads.
The fact that Facebook is focusing its advertising on garnering Pages more Likes is its fundamental problem. Yes, you can send ads to outside pages, but Facebook always suggests your fan page. It’s up to marketers to create compelling content to get the highest value from these fans, but then Facebook limits the number of fans your message can be seen by. Additionally, Facebook charges you money to push your message to more of the fans you’ve worked hard to earn. Facebook is double dipping to generate more ad revenue, which is an ineffective long-term strategy.
Facebook’s efforts are meant to keep activity on its platform with its ads (which is okay) but the company needs to alter the value users receive. A business isn’t run on the number of Likes a company has, but rather on actual revenue. That’s why it’s time Facebook focuses on commerce. If Facebook combines its individual user knowledge with mobile search and commerce, its mobile advertising will become something really valuable for your company.
Facebook has an unbelievable amount of knowledge on its individual users. Given comScore’s report that Facebook users spend 441 minutes a month on Facebook mobile (and all its apps), there is a tremendous amount of mobile ad growth a waiting for Facebook.
Facebook must improve its search capabilities, which Zuckerberg did address briefly at TechCrunch Disrupt. Getting people to search within Facebook will not only keep them in Facebook, but also open up more revenue possibilities. Facebook can start to power brand recommendations and strategically geo-target them. Mobile ad professionals might argue that this is limiting because the volume of impressions would become extremely low. For startups, that might be true. But Facebook has nearly one billion users, and it can afford to go after the long tail.
Facebook could also allow users to purchase within its platform — mobile or desktop — to generate transactional revenue. It all starts with Facebook switching its mobile ad focus from promoting Likes to more bottom-line action. This idea isn’t close to a reality yet, but if it does come to fruition, it will be great for Facebook as well as companies using its mobile advertising.
In the short term, your ad dollars are better spent on other marketing initiatives. Facebook hasn’t perfected its mobile ad business and you don’t want to waste your money as the company figures it out. But make sure you keep a close eye on Facebook’s mobile ad presence, because it could become your strongest mobile advertising play in the next 24 months.