The impact of mobile on advertising revenue

Anne Frisbie · June 20, 2012 · Short URL:

Something to welcome, not something to fear

A month out from the Facebook's IPO and it’s still a hot topic.  One of the most frequently referenced topics has been Facebook’s relationship to its own mobile presence, following its pre-IPO concession that it hadn’t quite determined how best to guarantee revenue on mobile. 

As rumors begin to swirl around the idea of Facebook developing and deploying its own mobile devices, and news is confirmed that Facebook will begin selling mobile ads independent of campaigns on the PC web platform, it’s important to first consider the relationship that Facebook has with the mobile sector of its audience—and the struggles it, and other companies, have found in monetizing mobile.

Computers have gone from machines that occupy an entire room to gadgets that fit in our pockets, and with increased portability has come increased accessibility to all of the data we previously only had access to while sitting at our desks.  With Facebook, that also means that your friends can come with you wherever you go. 

Increasingly, we’re finding mobile moving from “second screen” to primary device in all but professional computing uses, with consumers worldwide eschewing clunky desktop computers and cartable, yet heavy, laptops in favor of powerful, portable smartphones and computers.  Brands like Zynga and Pandora are following suit, focusing much of their energy—and marketing—on their mobile platforms, which have proven to have significantly higher ad engagement rates than their desktop and laptop computing counterparts. 

Little wonder that social networking and smartphones have grown up together, and quickly: where it took 17 years for PC web to reach its first billion connected devices, mobile devices will likely hit 10 billion in five years.  That’s as many as 10 billion devices that have the power to connect their users with one another wherever, whenever.  Facebook’s 900 million active users are just a sliver of the pie.

 The profit warning Facebook circulated a week prior to its IPO was a warning to potential investors that as more Facebook users switched to mobile devices, profits for the company could potentially decline.  As consumers spend an average of 142 minutes a day on their mobile devices (more time than watching TV or sitting in front of a PC) it’s essential to develop ad campaigns that work seamlessly on these platforms, so consumers can take your brand with them, wherever they go—and on a platform that we know they find engaging. 

Facebook mobile users share a remarkable amount of information about themselves on the platform, right down to their current locations.  Rather than simply running a re-scaled version of a web ad based on the city a person lists as his or her hometown on his or her profile (and likely forgets to update for a while following a move), running mobile ads that can tap into the check-ins and built-in geolocation features of smartphones can deliver targeted, engaging messages to a specific subset of consumers that will most welcome them.  So-called geocontextual targeting of ads doesn’t just tap into where you are but what sort of thing you might be interested in while you’re there.  And it likely won’t be long before these ads can move a step further, not just looking at where you spend your time but who you spend it with, and delivering ads, when you are together, that will appeal to both you and your companion.  More than any other company I can think of, Facebook has the power to deliver advertisements so on-target that users will, if not necessarily welcome them, certainly respond more positively to them.

Perhaps because they go everywhere we go, consumers have come to develop an almost emotional attachment to their phones.  Facebook—or any other brand—stands to profit greatly from loyal users on mobile devices if it can change its thinking around ads.  The mobile space isn’t a challenge to revenue: it’s a gateway to bigger profit potential from engaged consumers who are receiving the right messages.

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Anne Frisbie

Anne Frisbie is the VP & Managing Director, North America, at independent mobile ad network InMobi.

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