Agency: JWT, New York
By Mark-Anthony Baker, brandrepublic.com, Wednesday, 31 October 2012 08:30AM
According to commentators, Facebook was expected to reveal disappointing revenue growth figures recently, with the blame likely to be placed squarely on predicted poor returns from mobile advertising.
However, Facebook defied analysts’ expectations by revealing that, in the last quarter, nearly 14% of its $1 billion advertising revenue had come from mobile. The news saw the company’s shares rise by 11.7% to $21.77.
The social networking site has over one billion users and is currently addressing the challenge of generating a profit through advertising sales.
The quarterly results are surprising and suggest that Facebook is starting to make a profit in mobile. Mark Zuckerberg seemed as surprised as anyone and admitted that they are "just getting started in monetising mobile".
However, despite being one of the highest earning mobile advertising earners in the world, Facebook seems to have been caught off guard slightly and doesn’t feel like the market leader it should be in mobile.
As users engage ever more frequently with the social network through mobiles and tablets, the failure to completely connect marketers with this audience can only mean lots of missed opportunities.
Clearly, Facebook’s strategy of integrating mobile advertising into the user experience is not optimal - micro-blogging competitor Twitter is seen to be doing this well, and, as a relative latecomer to social networking has perhaps learned from the mistakes of Facebook.
Consumers’ attention is increasingly focused on their mobile devices - 77% of UK viewers use a mobile device while watching television and 38% of their daily media interactions are via smartphone.
For those getting it right, mobile advertising is becoming more rewarding, and both the UK and US mobile advertising markets have reflected this with total values swelling to $800 million and $2.6 billion respectively.
Facebook’s news feed algorithm is still not ideal - while ostensibly designed to protect the user experience, it only ensures the user is exposed to rewarding content such as frequently liked photos which may be from a brand’s page or friend’s wedding - and recent changes to the EdgeRank algorithm caused criticism among marketers.
Accusations have been made by two US advertising agencies (Team Detroit and Ogilvy) that the algorithm has restricted marketers’ post visibility to an unacceptable level in order to push brands to buy more advertising in the form of sponsored stories.
Whilst the intentions behind Facebook’s EdgeRanking system may be honourable, it works on the flawed basis that users need to be protected from marketing. The real intrusion on user experience is irrelevant, unwanted advertising.
When mobile advertising reaches the right parties it can only enrich the user’s interactions with the site.
However, we should all be cheered by these unexpectedly positive results. It is a clear signal that consumers are increasingly connected to their mobile and that they are happy to consume a range of content on their devices, from pure entertainment to branded content.
The challenge for Facebook is to really nail its mobile advertising offering for consumers and advertisers alike.
It is on a positive trajectory and I’m sure that the figures will give the company renewed confidence and energy to refocus its resources and imagination into a best-in-class mobile strategy.
This article was first published on brandrepublic.com