Mobile advertising still a possibility, even likely, for Facebook
By Chantal Tode
June 2, 2011
Facebook Places provides company with location-based user data
The mobile industry was stunned last week when a Facebook executive said the company is not focused on mobile advertising. However, this does not mean that the company will never embrace mobile advertising or that it is not already taking steps in that direction, per industry experts.
One reason for the strong reaction to statements made by Fergal Walker, Facebook’s head of mobile partnerships for Europe, Middle East and Africa, about the company’s lack of focus on mobile advertising is the social network’s growing mobile base that numbers approximately 250 million users. Instead of trying to monetize this base, however, Mr. Walker said that Facebook continues to be interested in building social experiences on the Web with partners.
“It is a strange statement for Facebook to come out with – I would say it is some sort of red herring,” said Nick Holland, senior analyst at Yankee Group, Boston. “Given that they are in the mobile space and have apps for every single platform, [mobile advertising] is clearly a focus.”
The slow road
With Facebook deriving most of its revenues from advertising and mobile advertising looking like it is going to continue to grow, it seems unlikely the company is not focused on mobile advertising in some capacity.
“Facebook has to gain revenues from somewhere,” Mr. Holland said. “I can’t think they won’t try to sell mobile advertising at some point in the future.
“What’s missing from the statement is that they are not focused on mobile advertising now,” he said.
“That could change in two months with the way things are changing so quickly in mobile.”
For now, however, Palo Alto, CA-based Facebook is taking it slow in mobile, something the company has done in the past.
Because Facebook is well-capitalized, it does not need to roll out something today but can wait until it feels a mobile advertising play is ready.
“Facebook’s approach to mobile advertising is not unlike its approach to monetization of its online presence where it similarly took a tempered path to the introduction of advertising,” said Linda Barrabee, research director of connected intelligence at The NPD Group, Cambridge, MA.
Instead, the company is focused on improving the user experience.
This includes efforts to perfect the platform and user experience with an eye toward deeply integrating the platform into mobile and mobile devices.
“With mobile being so personal to most people, I think Facebook is in a position to wait before it comes up with a solution that will continue to permit an optimal user experience and also add value to that user experience,” said Noah Elkin, senior analyst at eMarketer, New York.
“I don’t think they are not interested in mobile advertising,” Mr. Elkin said. “Facebook tends to be very deliberate in expansion of advertising in different platforms and were fairly slow to monetize the desktop site.
“I’m sure they are trying to figure out what works best in mobile.”
Facebook's Mr. Walker’s statements could also be taken as a ploy to divert attention away from the company.
Advertisers would certainly like to gain access to Facebook’s large mobile user base. But for now, they have to wait.
However, this does not mean that Facebook is not making moves in the mobile space. It launched its Places location-based service last year in the United States and broadened the reach into Europe and Canada earlier this year.
Facebook has also begun testing a daily deals service in five cities. And it acquired mobile advertising startup Rel8tion in January.
These moves speak to Facebook’s interest in location-based data on mobile users, which is something that also interests advertisers.
“While Facebook has amassed an enormous mobile user base that is extremely attractive to advertisers, it is still early,” NPD's Ms. Barrabee said. “But that doesn’t mean that Facebook is ignoring the significant potential for mobile advertising and marketing monetization opportunities, particularly when tied with such value-added elements as the mobile user’s local context.”
One reason for Facebook’s hesitation could be the recent intense focus on mobile privacy issues from consumer advocates and legislators.
“I think Facebook wants to avoid the appearance of privacy-related issues because this is something that has dogged them in the past,” eMarketer's Mr. Elkin said. “Because mobile is so personal, they want to make sure any advertising solution is something that doesn’t impinge on consumer privacy in any way.”
Chantal Tode is associate editor on Mobile Marketer
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