As Internet use moves from the big screen to littler pocket computers, Facebook is struggling with turning its popular, yet buggy, phone aps into money-makers. During its IPO filing last week, Facebook candidly admitted that even though over half of its 845 million members log into the social network via their cell phones, the company doesn't know how to make money off those eyeballs. "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," the company explained in its S1. As the company readies itself for post-IPO life, it has plans to turn that growth into revenue.
Get ready for ads in your app Newsfeed. Facebook will call them "featured stories", sources told The Financial Times' Tim Bradshaw. But behind the fuzzy marketing speak, this means paid-for content showing up in the mobile app. These ads won't look exactly like the little boxes that flank the browser version of Facebook. Unlike desktop browsing, in which we have become accustomed to sharing our giant screen with advertising, mobile users have less tolerance for product promotions. "We’ve had ads on our desktops for 15 years and we’re used to them," eMarketer analyst Noah Elkin told The New York Times' Jenna Wortham. "But on the smaller smartphone screen, they’re distracting and viewers tend to notice them more even though there are usually fewer ads." To deal with this small-screen issue, Facebook will hold an event at the end of this month, where it will unveil new ways for advertisers to promote content on these mini-computers. Following this event, we could see the fruits of this brainstorm session on our phones come March, reports Bradshaw.
Mobile advertising means location based advertising. The things about cell phones is they track our whereabouts. And that's one of the clever ways Facebook is looking to monetize the mobile social networking experience. "Even though Facebook’s browser advertising is already very targeted compared to other services, mobile advertising could be even more so, because it could take location into account as well," Jan Dawson, the chief telecommunications analyst at the research firm Ovum, told The Times. And, facebook has already nudged its way into this space with Places, a Foursquare-like check-in application that has users share their location with friends. If Facebook can get users to share location, that's just another useful data point to sell advertisers on.
In the meantime, don't expect an app redesign. Considering Facebook has to share app revenue with Apple, the company has less of an incentive to push users away from a smartphone's Web browser onto an app. "It’s always to Facebook’s advantage to have the Web be their operating system and leverage that to their advantage," venture capitalist Shervin Pishevar explained to The Times. "You can develop on the Web and reuse as much of the code as you can."