Are Facebook Mobile Ads The Golden Ticket?

by Amy Vale

With over 900 million users worldwide, Facebook is a marketer’s dream come true. Brands, no matter how big or small, should be looking at Facebook as thegolden ticket to grow their awareness, and ultimately, revenue. With users spending upwards of 8+ minutes each day on Facebook’s mobile site, where does the opportunity lie not only for this social network, but for the industry-at-large when looking at growth, as well as advertiser adoption and acceptance of the media channel?

In December 2011, there were a reported 425 million monthly active users on its mobile platform. According to the comScore Mobile Metrix 2.0 report, major brands experience heavy engagement on Smartphones. In fact, U.S. Smartphone users spend over 7 hours on Facebook (based on data from March 2012), compared to 6 hours and 31 minutes via desktop computers. What’s clear from these figures is the huge monetization opportunity that can be made possible with mobile advertising on Facebook. Until now, users have been very vocal in applauding the social network’s ad-free mobile versions. But the more users spend time accessing the social network via its ad-free mobile versions, the more revenue it stands to lose. It’ll be interesting to see how and if Facebook can bring in as much, if not more, mobile revenue than its desktop and products.

This may be the reason Facebook recently did something it’s never done before. A few weeks ago, the social network announced its plans to roll out its first ever mobile-only ad product. Essentially, marketers can now buy Facebook Sponsored Stories for the News Feed specifically for mobile devices. This is a very promising and telling move for Facebook.

ABI Research found that overall revenues from mobile applications, including pay-per-downloads, in-app purchases, in-app advertising and subscriptions will reach $46 billion by 2016, more than four times greater than the $8.5 billion earned in 2011. And 82% of the time spent with mobile media happens on apps. These numbers offer a very compelling business case for why more publishers will leverage mobile apps to earn revenue from consumers.

Think about how people use mobile apps. It’s a common fact that apps which are free to download initially get far more downloads than ones with a pay-per-download fee. However, as an app receives millions and/or billions of views and downloads – as we’ve seen with Instagram – the opportunities for monetization increase exponentially.

In-app purchases are another very promising and realistic avenue for mobile revenue. In January 2012, mobile app analytics company Localytics found that 44% of mobile application users who made an in-app purchase did so after their 10th session in the app. Zynga’s hugely popular gaming app – Words With Friends – has done a solid job of capitalizing on the exploding growth of casual mobile gamers. Users have the option to purchase in-app “tokens”, which they can then use for certain features, such as being able to disable in-app advertisements.  With an estimated 8.6 million daily active users, Words With Friends users gladly pay a nominal fee to continue playing the “viral” hit.

Finally, we can’t offer up ways that Facebook can grow its mobile revenue in smart and effective ways without talking about geo-location targeting. It may already be at the top of their minds given their recent acquisition of social location startup Glancee, a Smartphone app that tells users when people with similar interests are in the same or nearby location. We wouldn’t be surprised if the Facebook mobile product team isn’t analyzing what Glancee is good at doing (and areas for improvement) as part of its plans to leverage in location-based ads not only for people, but also to include notifications of relevant stores, merchants and businesses.

When you have a social network with the sheer volume of adoption and user interaction that it has, it’s impossible to ignore the many opportunities that Facebook offers to both brands looking to transition into mobile advertising and the industry at large.