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Advertising on the Go: Mobile Ad revenue & Facebook

facebook-mobileIn the United States alone, companies spent close to US $4 billion dollars on mobile advertising. Many experts believe that by the virtue of being delivered on our cellphones – an object most of us consider personal – mobile advertising is an intimate way of reaching out to consumers. While banners ads and SMS text ads are equally common, the latter, because they’re usually chosen by customers, perform better.

Mobile Search, of course, is the next big thing in search. Almost everybody who can use search on mobile is doing so. Despite this, target advertising is still rare in the mobile marketing world. So it’s not, by nature, interactive and mostly relies on text and banner ads. However, experts, like ABI Research practice director Neil Strother, believes that the future of mobile advertising is going to be much more focus and target specific. Right now, interactive ads are expensive and may not even be reaching the right consumer; certainly, a huge risk for marketers in the current economic environment.

Mobile ads need focus

Temporal and Spatial information is a valuable source for marketers. It helps them get to understand the consumer better, many times over. Tapping into this to create more effective mobile advertising will boost mobile advertising revenues. Strother predicts a future mobile social, in the form of a personal cloud, where social sharing and purchase could be done right from the device in one’s hand.

In recent years, mobile phone, by nature of its affordability and portability, has become one of the most widely used media device. Interestingly, it is also one of the least used media by marketers. Consider these figures: Mobile phone receives just 1% of the global marketing budget, despite the fact, that the total number of mobile phones in the world, are three times more than TV sets and 4 times over internet-based Personal Computers. Despite the fact that mobile isn’t as targeted, and interactive, as the other mediums, the sheer rate of return on investment is fabulous. The median CTR for Text Messaging is 14.06%, where as the median conversion rate is 8.22%; both rates many times higher than TV and Internet.

It sure gets attention

Because mobile advertising is an opt-in, where subscribers choose what they wish to receive, businesses can customize and offer real-time solutions and offers. For instance, a comforting Asian massage could be followed up by a lovely sushi meal. And indeed, more and more users would be open and available to receive this information on their mobiles, as it is believed that the average adult in the United States is spending more time on his mobile phone, as compared to the newspaper or magazine.

With the IPO just around the corner, Facebook needs to find ways to up its revenue. Given all that we have heard of mobile advertising, there’s one stream of revenue just waiting to be cashed by Zuckerberg and co. The company claims that out of its 800 million users, about 300 million use the social networking site on their phones. That’s one helluva revenue base just waiting to be tapped through mobile media.

 Going Facebook mobile

Nobody knows yet, how Facebook mobile will integrate advertising with it. It’s quite likely, of course, that the current PC formats, which may be highly customized, but are relatively non-obtrusive, could be adapted to Facebook mobile. Another possibility maybe sponsored stories that appear in the mobile news feed. For instance, actions like check-ins, posts, writing on the wall, could turn into sponsored stories.

Given Facebook’s huge edge in terms of what it can offer mobile marketers, i.e. customer information, users may indeed soon see Facebook advertising on mobile. Marketers could tap into the temporal and spatial variable advantage that Facebook offers and create ads that are better targeted. Facebook friendships could also be used to influence mobile advertising in some way. For instance, friends could ‘like’ a brand or offer real-time opinion, while a friend is at a store. Again, this works against marketers. But the advantages of mobile advertising outweigh its disadvantages for marketers.

Late-comer disadvantage?

While it may seem like the right time for Facebook to enter into the mobile advertising market, many may think the new-age companies rather late embrace of the new technology may be off. However, there are a number of reasons why Facebook may have chosen to hold off on mobile advertising.

One of the reasons, according to Dan Frommer of Business Insider, is that Facebook was originally conceived and later marketed and expanded as a desktop device. The mobile access was a mere convenience. However, given that there are 95 million monthly active users, it is a pleasant surprise for Facebook and now they’re going to use the handheld popularity to their advantage.

According to Frommer, Facebook must now make the site increasingly relevant and just as much popular on mobile devices, as it is on the computer. Navigating between the two media, should be a comfortable experience for users. This ease will help Facebook retain its leadership in social networking, even if the preference for the medium of access changes. It may be easy for experts such as Frommer to say, and while this may be valid, it is not as easy for Facebook itself to adapt to an entirely new medium so easily. Despite the figures of users staring them in their face and extra revenues seemingly so close, they must have chosen to remain focus on their core medium. Although, it is now time to adapt and change.

It’s all about the user

Mobile advertising on Facebook, like Facebook itself would be led by the user. The user will have to voluntarily talk about a product. For instance, at an apple store, a user has seen a new ipad and has posted the picture on his wall. This takes the brand, marketing and mobile advertising to the next level. Thus Apple is reaching consumers who are actually likely to appreciate and buy the iPad and Facebook gets paid for it. While users get to share information about products that they like.

At this point, Facebook’s web partners are Coke, Levi’s Playfish, among many others. It has also tied up with non-profits, such as Amnesty, UNICEF and so on. In fact, many brands can tie-up with non-profits and increase their profile on Facebook. For instance, IKEA has been trying to get Facebook users into its store by advertising that every Facebook friend invited to the IKEA store would be leading to a donation of $1 to Save the Children. This can easily translate to a Facebook mobile campaign!

As a late entrant, Facebook has some serious competition. Google’s Admob, Millenial Media’s Ad network and Apples’s iAd are all potential competitors. In fact, Google gets the biggest share of the mobile revenue pie in the US – about 24% of the $630 million in mobile advertising goes to the Google treasury. But then, Facebook has shown potential for exponential growth on the Web, it may just do them in mobile ad revenue.

 

 

Preetam Kaushik

Preetam Kaushik is a Tech Journalist covering all things Business, Technology and Social Media. He is a web 2.0 consultant and columnist educating businesses, individuals and professionals by providing insightful coverage on various business and technology issues around the globe. Preetam is Daily Deal Media contributor specializing in Social Media, Facebook, Google, New Ventures, E-Entrepreneurship, Marketing, Fashion and Entertainment Business. Connect: @kaushikpreetam
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