Wednesday, November 6, 2013

Are Facebook’s Mobile Ads a Fad or will Successful Monetization Stick?

Whoever coined the phrase “it’s lonely at the top” forgot to mention that that loneliness is often short-lived.

That’s because, at best, aggressive competition means an eventual sharing of the summit (think iOS and Android). At worst, it means a complete dethroning. Remember when AOL was the most popular Web portal?

For now Facebook, still the world’s dominant social media network, can bask in all the mountaintop sunlight it wants.

Not only has active membership continued to grow – it stands 1.2 billion or one-seventh of the world’s population – but desktop and mobile ad revenue is starting to add up. Fully 60% of the publicly-traded company’s third-quarter revenue came from advertising and nearly half of that ad revenue came from mobile devices.

This is especially impressive considering how fast Facebook’s mobile advertising ramp up has been, starting as recently as early 2012. In other words, Facebook has successfully monetized advertising in less than half the time it has taken digital media to achieve even modest advertising revenue results.

But how much longer will Facebook’s mobile advertising miracle continue? The company has already been extremely transparent regarding its own expectations. For starters, Facebook will not continue increasing the percentage of ads in users’ news feeds. With this growth capped, there’s only so many clever ways to incentivize higher click-through rates.

Then there’s the nagging concern that teens are beginning to tune Facebook out, switching to sites like Twitter or embracing a host of direct messaging apps. Some of the pullback is due to Facebook’s own success. What teen really wants to be “friends” with their parents on social media or have them or other authority figures poking around on what was once the equivalent of their digital bedrooms – places considered off limits? According to financial firm Piper Jaffray, only 23% of 8,650 recently surveyed teens preferred Facebook.

While the siphoning of younger support isn’t a big deal for Facebook yet, it underscores just how fleeting social media platform popularity can be and how ad revenues, like a seasonal stream, can dry up as fast as it floods. A decade ago Myspace was the leading social media network. Today, despite a flurry of recent positive news, the site has a very long way to go in its climb back toward greatness – if it ever gets there. Its base of 36 million users is similar in size to the population of the Greater Tokyo Area. One city.

How long Facebook remains on top is anyone’s guess. While I applaud the company’s mobile advertising monetization efforts and hope they continue, could it be a little too late as the next social media fad goes on the attack, chasing that summit?

No comments:

Post a Comment