Drift to mobile a new challenge for Facebook

With Internet users increasingly going mobile, a major challenge for Facebook will be trying to make money from its massive global presence in a more complex mobile space.

Facebook, which makes most of its money from advertising, says more than half -- 488 million -- of its 901 million members access the service from a mobile phone or tablet. Of these, 83 million use only mobile devices instead of computers.

But while 82 percent of Facebook revenue comes from ads, the company acknowledges that it gets little income from the mobile space.

"We have historically not shown ads to users accessing Facebook through mobile apps or our mobile website," the California firm said in a filing for its initial public offering.

"In March 2012, we began to include sponsored stories in users' mobile news feeds. However, we do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven."

Facebook says a big issue looking ahead is being able to get mobile revenue and that its revenue "may be negatively affected unless and until we are successful with monetization strategies for mobile usage of Facebook."

Most analysts note that advertising has not yet become adapted to mobile devices in the same way it has on computers.

"Last time I checked, mobile phones had really small screens," said Michael Pachter of Wedbush Securities.

Van Baker, an analyst with the Gartner consultancy, said so-called monetization will be critical for Facebook, which has "some catching up to do" with firms like Google and Apple.

Baker said Facebook needs to find mobile ads that are "not intrusive" and pointed to Google and Apple as using a type of mobile banner ad that "takes up a very small amount of screen real estate."

Google is seen as having a strong mobile platform, and recently decided to integrate its mobile, search and other services in an effort to offer more targeted ads, a move that drew criticism from privacy advocates.

London-based Hargreaves Lansdown Stockbrokers said in a client note that converting Facebook's mobile traffic into income "is perhaps one of the company's largest -- and currently perplexing -- challenges."

"Facebook was not conceived in the smartphone era and therefore did not have it in mind as a platform. It has catching up to do and, if possible, without cannibalizing its own current income from the PC space," the brokerage said.

The company could address the issue by purchasing apps that may offer other revenue sources such as the photo app Instagram, Tagtile -- for tracking customer loyalty -- and Glancee, an app for locating nearby friends.

Forrester Research analyst Melissa Parrish said, however, that the solution for Facebook in the mobile space "is probably something that we all haven't been thinking of yet."

"What's really compelling is the possibility that they will either figure out a way to monetize mobile that is not sponsored or advertising-based."

Parrish said Facebook could choose to offer marketers "a richer insight about the customers," or improve the "connection" between users and marketers.

"It isn't just about sticking ads in the news feed. If anybody is going to innovate around a product like that, I think that Facebook is a contender."

But Baker said that for Facebook, there is no sense of urgency in finding a mobile strategy.

"The company has a reasonable revenue stream, they've got an enormous base to monetize this, and then they're going to reap a huge amount of money with the IPO," he said.

"I think they're going to be very cautious about it. They can take as much time as they want."

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • No need for Revilla to visit son – prosecutors
    No need for Revilla to visit son – prosecutors

    Instead of filing an opposition, ombudsman prosecutors filed a manifestation yesterday expressing belief that there is no urgent need for Sen. Ramon “Bong” Revilla Jr. to visit his son at the Asian Hospital and Medical Center. “Based on the clinical abstract issued by the Asian Hospital on patient (Cavite) Vice-governor (Jolo) Revilla, which was submitted by accused Revilla in support of his Urgent Motion, Vice-governor Revilla is in stable condition and has stable vital signs, as of March 1, …

  • Troops overrun BIFF bomb-making facility in Mamasapano
    Troops overrun BIFF bomb-making facility in Mamasapano

    Government troops captured Sunday a bomb and weapons factory of the Bangsamoro Islamic Freedom Fighters (BIFF) in Mamasapano, Maguindanao, the Armed Forces of the Philippines (AFP) announced yesterday. Col. Restituto Padilla, AFP spokesman, said the captured bomb and weapons factory is located inside an area controlled by radical Muslim cleric Ustadz Mohammad Ali Tambako at Barangay Dasikil in Mamasapano. …

  • N. Korea fires missiles in anger at South-US military drills
    N. Korea fires missiles in anger at South-US military drills

    North Korea fired two short-range ballistic missiles into the sea and vowed "merciless" retaliation Monday as the US and South Korea kicked off joint military drills denounced by Pyongyang as recklessly confrontational. The annual exercises always trigger a surge in military tensions and warlike rhetoric on the divided peninsula, and analysts saw the North's missile tests as a prelude to a concerted campaign of sabre-rattling. "If there is a particularly sharp escalation, we could see the …

  • Couple married 67 years holds hands in final hours together
    Couple married 67 years holds hands in final hours together

    FRESNO, Calif. (AP) — After spending 67 years together as devoted husband and wife, there was no question how Floyd and Violet Hartwig would end their lives — together. …

  • How Islamic is Islamic State group? Not very, experts say
    How Islamic is Islamic State group? Not very, experts say

    CAIRO (AP) — Three British schoolgirls believed to have gone to Syria to become "jihadi" brides. Three young men charged in New York with plotting to join the Islamic State group and carry out attacks on American soil. A masked, knife-wielding militant from London who is the face of terror in videos showing Western hostages beheaded. …

  • Recruitment firm accused of worldwide scam
    Recruitment firm accused of worldwide scam

    Filipinos aspiring to work overseas should avoid dealing with a recruitment agency that has duped jobseekers worldwide, Labor Secretary Rosalinda Baldoz said yesterday. The National Bureau of Investigation has padlocked Global Visas Inc., which is based in Cebu. Baldoz said the agency’s parent company, ICS Global Visas Inc. based in the United Kingdom, has reportedly collapsed and left thousands of applicants without jobs.  “Global Visas was in the limelight this week, following its reported …

  • Lawmakers split on tax exemption for Pacquiao
    Lawmakers split on tax exemption for Pacquiao

    Colleagues of boxing champion Manny Pacquiao at the House of Representatives backed yesterday a proposal to exempt his earnings from his May 2 fight with American Floyd Mayweather from income tax. Internal Revenue Commissioner Kim Henares has urged Pacquiao to promptly pay taxes on his May 2 earnings, which are projected to reach at least $120 million (more than P5.2 billion). …

  • Solar plane passes new test ahead of planned world tour
    Solar plane passes new test ahead of planned world tour

    A solar-powered plane made a third successful test flight in the United Arab Emirates on Monday ahead of a planned round-the-world tour to promote alternative energy. Organisers hope that Solar Impulse 2 may head off around the globe as early as Saturday but caution that the launch is dependent on the weather, even in the relatively cloudless Gulf. The hour-long test flight was the plane's third from the UAE capital Abu Dhabi's small Al-Bateen airport, but the first for Solar Impulse chairman …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options