October 25, 2012
Facebook’s mobile customer base continues to grow quickly and was up 61 percent in the third quarter for a total of 604 million monthly active users.
However, with uncertainty in the market about Facebook’s ability to monetize mobile effectively, CEO Mark Zuckerberg underscored the company’s focus on mobile during a conference call with analysts to discuss the results. The social network has acknowledged that mobile will be crucial to its future success.
“I want to dispel this myth that Facebook can’t make money on mobile,” Mr. Zuckerberg said in the conference call with analysts this week. “This may have seemed true earlier this year because we hadn’t starting trying yet.
“Today, after just six months of ramping up our mobile ad business, we are already at a point where 14 percent of our ad revenue this quarter is coming from mobile – that is about $150 million and we are just getting started.”
More engaged users
Mr. Zuckerberg pointed to three trends that are coming together to drive Facebook’s opportunities in mobile.
First, Facebook expects to be able to reach more people via mobile than on desktop as smartphones begin to outnumber desktop computers. Facebook is already the most widely downloaded application on most smartphone platforms, making it well positioned to take advantage of the growth in smartphones.
Secondly, people on mobile use Facebook more often than desktop users. Someone who accesses Facebook on desktop has only a 40 percent chance of using Facebook on a given day while someone who uses mobile has a 70 percent chance of engaging with the social network on a given day, per Mr. Zuckerberg.
He also reported that since Facebook updated its iOS app, it has seen an 80 percent increase in News Feed downloads and a 20 percent increase in iOS engagement in terms of likes and comments.
“People on mobile are already more engaged than people on desktop and there is a lot more we can do to drive deeper engagement as well,” Mr. Zuckerberg said.
The CEO also believes that Facebook will be able to monetize better per amount of time spend on mobile than on desktop.
“The reason why I believe this is that on mobile, monetization has to be integrated deeply into our product,” Mr. Zuckerberg said. “On desktop, we built a multimillion-dollar business with ads on the side, separated from people’s primary experience.
“But on mobile, the ads will be more like TV – high quality and integrated into the experience rather than off to the side,” he said.
To address the need to deeply integrate monetization into the core product experience, Facebook has started letting each product group own the mobile monetization experience for their product.
Facebook, Menlo Park, CA, has been having a hard year so far, what with a lackluster initial public offering and disappointing second-quarter results. The company’s stock continues to trade at around half the price it went for at the IPO, in part because of the difficulties that the company has faced monetizing mobile.
In an effort to address some of these issues, Facebook has been actively introducing new advertising and ecommerce initiatives with the goal of driving revenue, including mobile ads such as Sponsored Stories in the mobile news feed and mobile app install ads.
Facebook also recently partnered with Apsalar on mobile measurement. Apsalar's Campaign Source Insights feature allows developers advertising on Facebook to measure both installs and actual user spend, or lifetime value, coming from Facebook campaigns.
During the third quarter, Facebook’s revenue increased 32 percent for a total of $1.26 billion. Revenue from advertising was$1.09 billion, representing 86 percent of total revenue, up 36 percent from the same quarter last year.
Facebook is by far the leader when it comes to mobile use of social networks. New research from Realit Mine shows that Facebook has more than two times the users via mobile compared to Twitter in the United States.
More importantly, when it comes to usage, Facebook is used hundreds of times more frequently on mobile than other social media platforms. The social network is also used throughout the day on mobile devices.
These numbers point to the potential Facebook has in mobile advertising.
“If Facebook can work out how to monetize mobile, there is no one better poised to harvest the latent value there,” said Rolfe Swinton, co-founder of Reality Mine, Manchester, Britain. “Their users spend far more time on Facebook on the mobile Web or mobile apps than any of their competitors by at least an order of magnitude from what we see.”
Chantal Tode is associate editor on Mobile Marketer, New York