Facebook’s Mobile Monetizing Strategies Paying Off
In case you haven’t heard, there’s this little company called Facebook now.
Barely nine years old, Facebook has managed to rise from its humble beginnings as a website exclusive to Harvard students in 2004 to the biggest social network in the world with over a billion members from various countries across the world and from all walks of life over 13 years of age.
What began as an exclusive social network has branched out to become one of the most lucrative companies in the world earning a revenue of $1.5 billion as of the last quarter of 2012.
How is Facebook earning money when registration is free? They earn several ways. The most common one is advertising. Facebook has ads at the right side of the screen and the site gathers from your clicks what adds appeal to you profile the most.
Facebook also makes money from online games offered to registered users. People do not pay for the games but for additional game features or in-game items and money.
Facebook was originally designed for the PC, but as more and more people started using handheld electronic devices like smartphones and tablets it finally became available for mobile in October 2011 when it launched its iPad app.
At first ads for the Facebook app for handheld devices were an issue considering the tiny space available on a portable device. It was not until the middle of last year that Facebook decided to place adds in their mobile apps.
Facebook mobile ad revenues
Has this strategy paid off?
At first investors were worried that Facebook was not going taking advantage of its growing mobile user base since before the company went public in May of 2012.
Facebook has only started putting up mobile ads around the middle of last year but revenues have grown to 41 percent or $1.33 billion in the last quarter of 2012 after expanding into mobile devices.
The company also said their mobile business accounted for 23 percent of total ad revenue for the fourth quarter. Their third quarter revenue for the same only accounted for 14 percent. Their overall fourth quarter revenue was $1.585 billion. So it does seem to be paying off.
“Two quarters ago we really had no mobile revenue, In the course of a pretty short period of time, we’ve dramatically ramped up our ability to monetize mobile,” Facebook Finance Chief David Ebersman said.
Facebook now looks at its mobile space as its biggest opportunity, said CEO Mark Zuckerberg.
“It allows us to reach more people, we have more engagement from the people we reach and I think we will be able to make more money for each minute people spend with us on…mobile devices,” he said.
From PC to the mobile; Facebook users shift platform
Today an estimated 618 million people use Facebook daily.
When it started in 2004 the number of Facebook users was estimated at a million, all of them either PC or laptop users, and most of them students of Harvard, MIT, Yale University, Columbia University, Boston University, Boston College, Northeastern University, Stanford University and Dartmouth College.
Growth became steady, 5.5 million by the end of 2005 when high school networks and international school networks were added.
It rose to 12 million by the end of 2006 after it officially opened its doors not just to students but everyone over 13 years old and with a valid email address.
By April 2007 it was 20 million, 100 million by August 2008, 350 million by end 2009, 608 million by end of 2010, 845 million by end of 2011 and 1.01 billion by September 2012.
By the end of 2012 Facebook had around 1.06 billion active users a month.
Until the last quarter of 2012 most of Facebook users opened their accounts via personal computer, now an estimated 680 million people with Facebook use mobile devices like a tablet or a smartphone to check their accounts.
And with tech pundits declaring the PC is seeing its last days more and more people are expected to buy handheld electronic devices like smartphones and tablets. Research firm IDC said for 2013 some 918 million smartphones and 172 million tablets are expected to be snapped up by consumers worldwide.
Facebook redesigning news feed
Earlier this month Facebook announced it was redesigning its news feed to attract more revenues. This design includes the ability to personalize content to user preference, something seen to motivate advertisers pay for the right ads to appear rather than just wage a wide ad campaign.
Facebook has decided to use feed-based ads as opposed to banner ads for their mobile apps due to the same issue that made ads for mobile apps an issue at first; screen space.
The company will have to carefully balance user experience against commercialization where mobile apps are concerned.
While Facebook has been trying to put more ads into is mobile apps observers said that it should not alienate users who would understandably use the app to get in touch with their friends rather than receive ads.
There is also a pitfall to this strategy; poor ad targeting. Though, understandably, Facebook cannot be held fully responsible for this.
One mobile Facebook app user on thenextweb.com complained of being bombarded with ads promoting online gambling whenever he uses the app. With no interest in gambling whatsoever the user said the ad is a prime example of a poorly targeted ad.
“Suddenly there’s a former Australian cricket superstar taking up most of my screen asking me to gamble – it’s invasive and makes me feel less inclined to use Facebook’s mobile app,” the user said.
Considering there are now over 600 million people who use mobile devices to access Facebook, how many poorly targeted app users could be out there?
However it should be mentioned that along with their announcement to redesign the news feed, Facebook is also promoting what is called ‘custom audience’.
This so-called custom audience increase the effectiveness of targeted as by combining Facebook’s user data and an ad agency’s customer data. This should minimize victims of poorly targeted campaign ads like the app user mentioned above.
This is hardly the end of the issue. Between how many more strategies ad companies can come up with, consumer feedback and how Facebook deals with this, app users can expected further improvements or adjustments to be made to this system.