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Facebook Figures Out Mobile Monetization

John Joe Smith | Marketing Intern

As synonymous as Facebook has been with success and innovation, there is one dark spot on their performance record of which many are aware, mobile.  That is, the company has been unable to resolve the threat that a user-base gone mobile poses to their revenue stream.

Consider this, in 2011, 85% of Facebook’s $3.7 billion in revenue came from ad sales.  While this figure makes it seem as if Facebook’s ad revenue is not an area of concern, it actually indicates the exact opposite.  The growth of Facebook’s ad sales year after year has been lagging behind overall company growth to a greater degree since 2009.  The reason is Facebook’s user-base has been rapidly converting  to mobile, an area that the company has struggled to monetize.  According to, 543MM Facebook users now access the site through mobile devices, recording 67% growth year over year.

With the limited amount of space mobile devices afford, UI engineers and product managers at Facebook have struggled to figure out how to serve mobile ads without disrupting user experience.  Past experiments with in-app ad formats have contributed  to a poor user experience causing many users opt to use Facebook’s mobile site instead of their free app.

But now it seems Facebook may have figured out how to monetize mobile with its organic-seeming “sponsored stories”, which are paid ads that shows up in a user’s news feed in the same format as a network update.  Facebook is now giving advertisers the option of serving these ads strictly through its mobile app.

The seamless integration of these sponsored stories into mobile users’ news feeds helps to both resolve the issue presented by the limited amount of space mobile devices afford as well as engage mobile consumers without disrupting user experience.

Don’t bet on the folks at Facebook’s Palo Alto campus to sit back and rely on this new integration as their sole form of mobile ad serving.  If the social networking giant has taught advertisers one thing, it’s that they never settle for better than most.  According to TechCrunch’s Josh Constine, Facebook is also working on a hyper-local mobile ad targeting product that could serve relevant local business ads to users within a few hundred feet of advertiser’s brick and mortar locations.  Additionally, the new Facebook-Exchange real-time bidding system is expected to drive up CPC and CPM prices by getting  advertisers to compete for highly valued mobile users, including those who have been identified as displaying purchase intent.
What does this mean for advertisers?  Agencies have taken notice of the stellar performance of these ads, and inventory has been in high demand, driving mobile CPC and CPM up 36.5% and 165% respectively when compared to desktop campaigns.  And while these campaign test results may make it seem as if Facebook is the only platform your mobile initiatives need, caution is key. Remember that these tests are limited in scope.  Until we see a few well substantiated case studies on the post-click engagement for these ads, you may want to hold off allocating a large portion of your mobile budget to Facebook.  Rather, advertisers should have a defined goal for their mobile campaigns, consider Facebook’s strengths and weaknesses in the mobile sphere, and then decide whether or not it makes sense to run with them.

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