Facebook seemed to buoy the entire mobile marketing industry last week when it reported ads on phones and tablets accounted for 41 percent of the company’s overall revenue last quarter, up from just 14 percent a year earlier. Mobile ad revenue came in at $656 million, up a whopping 76 percent over the previous quarter. Investors responded by sending shares up nearly 30 percent for a record one-day gain, and the enthusiasm has grown this week as the stock reached its highest value since the first day of trading following the company’s IPO more than a year ago.
That newfound exhilaration is understandable, of course, if perhaps slightly premature. Like many other companies expanding into mobile – Zynga is a great example here – Facebook has long struggled to monetize phones and tablets as effectively as it has profited from PC users. And while Facebook now boasts a massive mobile audience of 819 million users, its inability to profit from those members was the primary reason the stock had languished for 14 months.
Think outside the banner
Perhaps the biggest reason Facebook ads have seen early success is that they’re such a good fit for the content. Unlike banners that appear to vie for space against the stuff users actually want to see, the ads that account for 5 percent of all newsfeed items fit the overall format without looking like they’re trying to fool the reader. Also, Facebook has done a good job of retaining a consistent user interface across devices even as it tweaks its content for the smaller screens of mobile phones. Those strategies not only make mobile ads more tolerable than banner ads from a user’s standpoint, they make it easier for advertisers to extend their brands to mobile, as this insightful AdAge piece points out.
And while Android and iOS tend to get almost all the attention from publishers and advertisers in mature Western markets, Facebook has done a great job of addressing a much larger audience than just those of the two biggest smartphone platforms. CEO Mark Zuckerberg said last October that its mobile site saw more users than Facebook’s number of Android and iPhone users combined, and its “Every Phone” app for feature phones recently surpassed 100 million monthly users. Addressing those lower-end devices is a sound strategy in advanced markets where millions of consumers still use feature phones, but it is particularly effective in emerging markets where mobile data consumptions is starting to soar.
We still have a lot to learn
But just as Starbucks has been uniquely positioned to make big strides in mobile payments, Facebook brings strengths to the mobile advertising table few others can. It has a huge base of relatively young, tech-savvy users who have long been accustomed to using their phones to check in with friends on the go. Facebook has an ever-growing base of advertiser partnerships it can expand beyond the PC into mobile. Perhaps most importantly, its simple content of shared photos and status updates lends itself well to mobile phones and ads. So while Facebook’s recent successes justifiably offer hope for the broader mobile ad industry, those success are unlikely to be replicated. And it’s not clear whether advertisers will be pleased with the results of their recent Facebook campaigns.
It’s also worth remembering that we’re still in the very early days of mobile advertising. Facebook’s mobile ads are often ill-targeted – I still see ads for products I would never buy or bands I don’t like – and marketers are a long way from fully leveraging location and other information that would help them deliver mobile ads more effectively. And advertisers still don’t have all the tools they need to determine the ROI of their campaigns and tweak their efforts and business models accordingly. Just as there are lessons to be learned from Facebook’s recent progress, it’s far too early to ask whether they’ve cracked mobile.