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Facebook needs more precise targeting for next mobile revenue bump

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Mobile accounts for 80 percent of Facebook's advertising revenue

With mobile now accounting for 80 percent of Facebook’s growing advertising revenue, more precise targeting will be needed to maintain a strong user experience.

Underscoring Facebook’s significant and still growing strength in mobile advertising, the social media giant’s fourth quarter revenue and earnings – which were released yesterday – beat analysts’ expectations, helping to drive up the company’s shares in late-day trading. Mobile advertising continues to be a growing portion of Facebook’s business, representing approximately 80 percent of advertising revenue for the fourth quarter, up from 69 percent in the year-ago quarter and from 78 percent in the previous quarter.

"Facebook's biggest mobile success is the fact that they've cracked the code on the cross-device marketing challenge," said Patti Renner, vice president of marketing for North America at IgnitionOne. "With their 'walled garden' orientation, sign -in and knowing who is on their platform regardless of device being used, their recent Facebook Website Custom Audiences has opened the door for marketers to reach customers and look-alikes with that mobile-desktop connection in place. 

“While its rules-based approach is somewhat basic as far as targeting is concerned, it is certainly successful,” she said. 

Mobile advertising
Facebook reported yesterday that overall revenue grew 52 percent for a total of $5.8 billion for the fourth quarter ended Dec. 31, 2015. Advertising revenue was up 57 percent for a total of $5.6 billion. 

In terms of users, Facebook had 934 million mobile daily active users in Dec., up 25 percent year-over-year. Mobile monthly active users totaled 1.44 billion at the end of December, up 21 percent from a year ago. 

“As reported in our latest Devices & Demographics research, Fluent found that 78 percent of all ads served in Q4 2015 took place on mobile devices, so Facebook is effectively capitalizing on prevailing consumer device adoption and usage trends to fuel its growth,” said Jordan Cohen, chief marketing officer at Fluent. 


Video in focus
In a conference call with analysts to discuss the results, Facebook’s co-founder and CEO Mark Zuckerberg pointed to video as an important focus going forward. 

With video consumption on mobile devise continuing to grow, Facebook needs to have a strong play here to compete with Google’s YouTube. 

“Video is an important part of the Facebook experience and continuing to invest here is important for allowing people to share and consume some of the most engaging content,” Mr. Zuckerberg said. “We continue to make progress and now 100 million hours of video are watched daily on Facebook. 

“We’ve been testing new experiences like suggested videos, which enable people to experience more videos they might be interested in,” he said. “We are also exploring ways to give people a dedicated place on Facebook for when they just want to watch video.”


Relevant ads
Facebook is not resting on its laurels in mobile advertising, announcing this week that is expanding its ad network to the mobile Web. This means the company will work with publishers to sell advertising on their Web sites. The network previously sold ads into third-party apps. 

Some of the publishers who have tested the mobile Web ads so far are Hearst, Slate, USA Today Sports Media and Time Inc. 

Facebook’s signature Like button will also soon be downgraded as it looks to enhance the experience and take advantage of mobile-driven digital shorthands like emoji.  Facebook is expected to launch Reactions in a few weeks, enabling users to pick between seven different emotions related to a post. 

"I think the greatest challenge for Facebook is to maintain the balance between user experience and business interests,” Ms. Renner said. “If the sponsored content becomes too much or lacks precision and relevance, they risk rejection by growing numbers of users. 

“For marketers, it’s about best practices – what can you do to ensure a great experience for your audiences even on Facebook,” she said. “For IgnitionOne clients who use Facebook Custom Audiences as part of their marketing mix, we encourage an even higher level of precision in their campaigns to ensure their brand stands out on the newsfeed when it comes to relevance, even higher than what's offered in the standard Facebook offering.”
 

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Senior Editor Chantal Tode covers advertising, messaging, legal/privacy and database/CRM. Reach her at chantal@mobilemarketer.com.

 
Related content: Social networks, Facebook, social media, mobile advertising, Mark Zuckerberg, IgnitionOne, Patti Renner, Fluent, Jordan Cohen, mobile marketing, mobile

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