BII REPORT: How Facebook Is Trying To monetise Mobile


In Facebook’s S-I filing, it cited mobile usage as a potential risk to the business as it “does not currently directly generate any meaningful revenue.”

Since then, the focus on Facebook and its stock price has focused almost exclusively on its mobile plans and ambitions.

In recent research reports, such as reports on Mobile Usage, Mobile Advertising, and Mobile and Social, BI Intelligence has analysed the challenges and opportunities before Facebook as it looks to turn increased mobile usage from an S-I level risk into a monetization success story. 

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Here’s the story:

Mobile usage is exploding — and so is mobile social networking: Social networking is one of the most popular smartphone activities, with 37% of US smartphones owners using one at least once a day. Facebook reported it has 540 million mobile users, and they are 20% more likely than others to use Facebook on any given day. And the smartphone revolution, in many ways, is only getting started globally. 

The mobile advertising market is still in its early stages though: Mobile CPMS are low, and ads are oftentimes intrusive. Ad spending has therefore not caught up with time spent on mobile. Sponsored stories will help, as consumers are most likely to pay attention to sponsored stories or links over other forms of ads on mobile phones. 

The real key is monetizing social discovery:  Consumers have cited relevance as the mobile ad factor most likely to draw their attention. Social discovery — the use of social apps on mobile devices to find nearby people and places that are most relevant to what users are doing at that particular moment — may be the key business model to make social work on mobile. 

But, Facebook lacks much useful location data: Check-ins have simply not gone mainstream, and Facebook abandoned its check-in feature rather quickly.

This means more and better mobile products and features from Facebook – and quite possibly a Facebook phone: Zuckerberg and Co. have already put a lot of the pieces in place that will be instrumental in building a mobile platform and allowing Facebook to monetise mobile via location-based advertising, mobile commerce, and app distribution.  These include:

  • Camera app (and acquisition of Instagram)
  • Messaging app
  • App store
  • Payments system (Credits)
  • Expertise related to location-based check-ins (Gowalla acquisition)
  • Social-discovery app (Glance acquisition)
  • Mobile gifting capabilities (Karma acquisition)
  • It’s reportedly considering buying a mobile browser maker (Opera) as well. 

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