How Can Facebook Monetize Mobile?

February 8, 2012

Facebook’s S-1 states that users are increasingly accessing it through mobile devices but the company does not yet monetize mobile. “Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results;” There are 425 million monthly active users (MAUs) accessing Facebook through mobile devices. See link here. 

Even though the S-1 presents this as a risk factor, this is a huge opportunity that the company must certainly be planning to address.

One big challenge withMobileis that only one ad can be shown per page. On PC based interfaces, Facebook shows several ads per page (as many as 7 ads). So the monetization potential for that single mobile ad has to be equivalent to all the 7 web based ads combined.

This means that mobile ads have to be extremely targeted and relevant to induce users to take action. Regular display or banner ads or even generic sponsored stories will not cut it. Mobile ads should be sharply targeted, and the right ad delivered at the right time.

What monetization options does Facebook have?

(1) Location based offers and ads:

Facebook can let users check-in to receive coupons and offers based on their locations. Similarly users can also receive ads and offers as they drive by a particular area. For example, if a user is on a particular street inSunnyvale, she could receive offers or ads from Coldstone Creamery in the vicinity.

(2) App usage:

Mobile devices are used extensively to reduce boredom and to pass time. Facebook can encourage users to access apps and games via its mobile device. If a user is bored they may be more open to purchasing digital goods for entertainment, or purchasing movies for view, for example, via the Warner Brothers page on Facebook.

The challenge is that users could access games and apps directly via their mobile device’s app marketplace instead of via Facebook’s app marketplace. For example a user may prefer to access the Angry Birds mobile app directly rather than Farmville through Facebook. There has to be a compelling value proposition (for eg, interaction with one’s Facebook network or apps’ unique availability only on Facebook). The user interface for accessing Facebook apps via mobile also needs to be seamless.


Twitter Monetization: Combining Offers with Advertising Would Be a Good Approach

January 16, 2012

Make User interests Explicit

Twitter’s monetization has focused on Promoted Tweets and Promoted Accounts. Promoted Tweets show up in users’ timelines as well as when users perform a Search on Twitter. But unlike regular Search, user intent is typically not readily identifiable on Twitter. For example, on Google/ Yahoo/ Bing, user intent is very explicit when the user searches on “laptop deals” or “car insurance”. But on Twitter, users often do not make commercial searches. And when users are not explicitly searching, it is hard to make guesses about their intent or interests.

On the other hand, Twitter is a natural medium for Offers and Deals. Several companies such as Walmart already use Twitter to tweet specials to their followers. But instead of waiting for users to follow specific accounts, a better approach would be to ask users themselves to state their interests and then tweet to them based on their stated interests. This combines the Advertising model with the Offers model.

 

This is how it can work:

Bottomline:

  • This approach makes users’ interests and intent explicit, providing greater value to advertisers as well as a good user experience. Since users have specified what sort of offer categories they are interested in, advertisers get ‘pre-qualified’ users.