February 27, 2012
By Stuart John
Facebook’s almost certain move into the mobile advertising space should be an exciting new option for brands. Everyone has been expecting them to monetize mobile and this is an obvious way to do it.
Whether it is search, sponsored stories or likely both, this presents a new opportunity in the publishing space, with a ready-made and growing network of around 350 million engaged consumers.
The majority of Facebook’s mobile users are from developed nations and come through a smartphone application ecosystem, which is a hugely important sector for marketers and brands to target.
That said, it will be extremely interesting to see how Facebook integrates its mobile advertising plans in to its Every Phone app. However it does this, one thing is for sure: mobile advertising will never be the same again.
Network is the message
According to Nielsen’s Q3 2011 Social Media report, U.S. consumers spend more time on Facebook than any other Web site. Morgan Stanley analyst Mary Meeker’s report back in October 2011 revealed that 33 percent of all Facebook’s traffic comes from mobile devices, accounting for nearly 20 percent of all peak mobile traffic in North America in terms of data consumption.
Across Europe’s five largest markets, social networking grew 44 percent in the year to September 2011.
At the end of 2011, smartphone penetration across the world was 36 percent and this figure is only increasing.
Facebook almost certainly will not wish to add banner advertising to the mix, given the effect it would have on screen real estate and on the front-end experience, as historically users have tended to bemoan changes to the interface over anything else.
With Bing already integrated into Facebook’s online search offering, and advertising accounting for 89 percent of its revenues, the move to mobile should be straight-forward.
With Sponsored Stories, the chosen bridge between social and ads, this should be a great opportunity to create hyper-targeted, personalized, possibly even location-based advertising.
While many carriers never fully bought into the idea of proxy marketing, foursquare’s opt-in offer service only has 15 million subscribers and other daily offer sites receive frequent complaints regarding the lack of relevance.
The data that Facebook holds could finally make the ultimate marketing dream a reality – right time, right place and right context. The ability to track and infer is the Holy Grail and an opportunity not to be missed.
While users knowingly and comfortably hand data to Facebook, many early adopters saw it as a free service to communicate with friends, family and colleagues and did not sign up with the impression that it would be used as a marketing channel.
There is, of course, the danger of taking things too far when combining this with personal, social and search data, especially given the previous examples of Facebook users protesting about what they feel as breeches of their privacy.
If conversations were monitored to enhance relevancy in advertisements, the inferences would have to be subtle. While there will inevitably still be some sort of reaction, a simplification of the method to allow users to opt in or out of such messaging would easily solve the problem.
Many consumers would be happy to receive relevant advertising, for example, if you were planning to go out for dinner, then local restaurant ads and promotions would be perfect.
Many users at least recognise this as a necessary beast of getting a great free service.
Ads up
Britain’s Internet Advertising Bureau found that 82 percent of smartphone users and 73 percent of tablet owners stated that they would prefer a free service with ads than to have to pay a subscription.
Facebook could even explore a premium, paid-for, ad-free service for those who might object to ads on their Facebook mobile service.
While unhappy users could vote with their feet, alternatives and non-corporate social media sites such as Diaspora have died a death and Google is receiving scorn in the tech world for adding social Google+ results into users’ search queries.
We are yet to see whether the relevancy of what people in your circles are talking about will have an effect on search engine preference. For now, Google accounts for more than two-thirds of searches in the United States alone.
If Facebook incorporates search and social on your mobile, this will add something useful to your connected life.
Google is putting social into search, something that until now people only understood as something objective.
Facebook will go for an IPO in May, and the figures are eye-wateringly huge. It is rumoured to be raising $10 billion, with a valuation of $100 billion. If that becomes a reality, it will be the largest IPO of any tech company in history and six times that of Google’s back in 2004.
Brands will have to decide which network to buy their media on and Facebook offers the opportunity to target users in a different way.
As there is inevitably a set budget to deal with, this could well cut into Google’s display advertising revenue – which is the foundation of its empire. Search is still Google’s to lose, despite the looming media giants, there is everything to play for.
ONE FINAL THING that we have been pondering: where will the mobile click-through go?
While Facebook wants to give its users the best mobile experience possible, what is it doing to encourage brands to build mobile-optimized sites? Will it be relying on Google to do the work? Or will it keep people within the site maintaining company founder Mark Zuckerberg’s overall vision of Facebook as a platform for the Internet and allow users to interact with the ad within their profile, perhaps?
This would no doubt help increase the effectiveness of rich media and help reduce the cost, but will the Holy Grail of marketing and advertising be achieved in 2012? Only our Timelines will tell.
Stuart John is vice president of product and strategy at Somo, San Francisco. Reach him at stuartj@somo.com.
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