(Updated to reflect comment from Kenshoo)
Mobile advertising will be the key to whether or not we are all still talking about Facebook in five or ten years. As the company's most recent quarterly numbers show, its userbase is quickly going mobile, and advertising is the social network's main source of revenue. If advertising on mobile fails, then so will the company. Its really as simple as that.
The folks over at Facebook should be relieved to hear that that seems unlikely to happen, at least according to data released by digital marketing software Kenshoo Monday that shows mobile ad spending growing quickly.
The data from Kenshoo reflects a sample of advertisers who used Kenshoo Social to track impressions, clicks and conversions on their Facebook ad campaigns. It covers over two million Facebook ad clicks and conversions delivered in November and December 2012 across a wide range of verticals including retail, financial services, software, games, entertainment and travel. Mobile metrics are inclusive of phones and tablets.
The data shows that 20% of ad spending is put into ads that are delivered exclusively on mobile. In October, Mark Zuckerberg said that mobile was accounting for 14% of ad spending, meaning it has gone up 6% in just four months.
While desktop still dominates with 79.7% of dollars spent, it is still pretty impressive considering that there was no such thing as a Facebook mobile ad until March of 2012.
Calling the growth "significant," Todd Herrold, Senior Director, Product Marketing for Kenshoo Social, said in an interview with VatorNews that Facebook is "very quickly putting to rest the criticism and concern over its mobile strategy, or lack thereof."
The data also shows that shows that Facebook mobile ads are currently priced at a 70% premium over desktop ads, costing $1.38 a click, compares to 81 cents on desktop. Mark Zuckerberg said in September that mobile ads were already more effective than desktop ads, and that would certainly seem to be the case if brands are willing to pay so much more per click just to get their names on mobile ads.
The reason that ads cost more on mobile, Herrold said, is that there is simply less space than there is on desktop, in addition to Facebook being careful about not overloading the site with paid messages. Those two factors, he said, are making it an issue of supply and demand.
The goals and objective of advertising on a mobile device are more targeted and specific to a user mindset of a mobile user, he said.
An interesting piece of data to come out of Kenshoo's research is that while Apple absolutely destroys Android in terms of ad spending, 97% to 3%, Android comes out on top when it comes to phones, albeit by a much smaller margin, 71% to 29%.
Herrold says that this result is partially due to Android simply having a larger global install base on phones, while Apple has a larger install base on tablets. But, since the disapartiy between the two on tablets is so wide, he said, it also has to do with advertisers not yet getting how to target specifically for tablets.
The takeaway from the data, Herrold said, is that mobile ad campaigns perform best when they are specific to mobile and advertisers have already begun to take advantage of that fact. In the next year or two, he said, campaigns will become more granual and specific.
Facebook mobile growth
According to its third quarter numbers in October, Facebook's mobile MAUs were 604 million as of the end of September, an increase of 61% year-to-year. The company's total revenue for the year was $1.26 billion, of which $1.09 billion, or 86% of total revenue, came from advertising. It increased 36% from the same quarter in 2011.
So it is easy to see why mobile advertising is basically a do or die proposition for Facebook. Luckily for Facebook, in August, it came up with an effective way to turn mobile ads into dollar by allowing ads in mobile news feeds.
The ads appear in user News Feeds as what looks like suggestions, or recommendations, for which apps a user may like. For example, it may come under the header "try these games." Once a user clicks on one of the ads, or suggested apps, they will be redirected to either the iOS App Store or to Google Play to purchase that app.
The ads can be specifically targeted to certain audiences, specified by age group, gender and region. Tools will also be provided to the developers that will help them monitor the effectiveness of the advertisements
The ads proved to be so profitable that eMarketer revised its mobile ad spending projections for the year in December, based simply on the results of those advertisements.
“The world’s top brands have embraced Facebook mobile advertising and we expect the channel to become increasingly competitive as new devices, like those on display at the Consumer Electronics Show this week, deliver enhanced interactive experiences,” Aaron Goldman, CMO at Kenshoo, said in statement.
“Leveraging Kenshoo Social’s advanced workflow tools, marketers can cater to the specific mindsets of people using Facebook on desktop computers, tablets and phones by creating targeted campaigns. From there, Kenshoo Social can help effectively monitor brand performance and quickly optimize campaigns based on variances between different device types and operating systems.”
(Image source: http://mashable.com)