SUBSCRIBE TO TMCnet
TMCnet - World's Largest Communications and Technology Community

TMCnet FEATURE

TMCNET eNEWSLETTER SIGNUP

May 10, 2012

Facebook Unsure How to Generate Ad Revenue from Mobile Use

By Rory Lidstone, TMCnet Contributing Writer

The migration of Facebook users to mobile platforms like iOS and Android (News - Alert) is compromising the company’s ability to make money from them, according to additions the social networking giant made to its IPO regulatory filing on Wednesday. This is of little to concern to Facebook (News - Alert), though.


The company continues to reiterate its core philosophy of prioritizing user experience before generating revenue, particularly in terms of its mobile offerings, as it fields questions from potential investors this week and next on its IPO road show, much to the chagrin of investors and analysts alike.

“They have to figure how to monetize their mobile audience in the short term,” said Jed Williams, an analyst with analyst firm BIA/Kelsey. “They haven’t done that to date, and they have to do it in a way that doesn’t disrupt or shatter the user experience.”

The problem is that the number of daily Facebook users is increasing faster than the number of ads it delivers to them. This is mainly due to the rapid increase in mobile Internet traffic, and therefore the increase in mobile Facebook, an area where the company currently shows little to no ads in people’s newsfeeds.

It also has partly to do with certain product decisions that have reduced the number of ads shown per page to desktop users.

The strategy of users and user experience first is not a new one for Facebook, however, and the company’s refusal to change this strategy is refreshing while in some ways undermining predictions that Facebook would transform drastically after becoming public. Not only that, but generating revenue from mobile apps can be difficult, as evidenced by the growing number of profitless companies that have been launching video sharing apps recently in the hopes of capitalizing off of Instagram’s success.

It is difficult to see too where ads could fit in Facebook’s mobile forms, as keeping a clean interface –  something Facebook has strived toward – is key for user experience when dealing with three to five inch touch screens.

Facebook has set a price range of $28 to $25 for its initial public offering of stock and is seeking a valuation of $85 billion to $95 billion when it goes public in a few weeks.




Edited by Braden Becker
» More TMCnet Feature Articles

Comments powered by Disqus

LATEST TMCNET ARTICLES

» More TMCnet Feature Articles




LATEST VIDEOS

DOWNLOAD CENTER

UPCOMING WEBINARS

MOST POPULAR STORIES





Technology Marketing Corporation

800 Connecticut Ave, 1st Floor East, Norwalk, CT 06854 USA
Ph: 800-243-6002, 203-852-6800
Fx: 203-866-3326

General comments: tmc@tmcnet.com.
Comments about this site: webmaster@tmcnet.com.

STAY CURRENT YOUR WAY

© 2013 Technology Marketing Corporation. All rights reserved.