What is Facebook’s game plan for monetizing mobile

By Dan Butcher - September 27, 2010

Facebook's Android app
Facebook has made clear that it is making mobile an increasing priority, but there are lingering questions about its monetization strategy.
In recent interviews, founder/CEO Mark Zuckerberg has downplayed rumors that Facebook is looking to release a handset or compete more directly with Apple and Google in the mobile space, saying that his company wants to play nice and focus on partnerships. But will Facebook be able to innovate when it comes to monetizing its mobile assets?
"Facebook's mobile strategy in the mobile market, which focuses on breadth rather than depth, is very smart," said Melissa Parrish, New York-based analyst of interactive marketing at Forrester Research. "What Facebook does very well is about connecting people, and while [Mr. Zuckerberg] does talk about the technology, and of course they are a technology company, they do place the focus on the quality of interaction.
 
"As far as the monetization piece, the breadth-versus-depth question speaks to some potential areas where Facebook could expand the monetization aspect," she said. "Currently Facebook's mobile apps don't feature ads, although we expect that they will soon.
"The question is, is Facebook going to be the one that figures out new ways for marketers to reach consumers that are not display or SMS based? That's where the excitement factor comes from."
With a half-billion users and 100 million of those mobile, Facebook will make major waves in the mobile space with its location-based Places platform—if it is able to get it right (see story).
When it first announced the launch of Places last month, Facebook professed that it wants to collaborate, not compete, with other location-based mobile social networking platforms. It opened up APIs to developers.
Facebook even called executives from Foursquare, Gowalla, Booyah and Yelp on stage to talk about each platform's integration with Places.
Mr. Zuckerberg was conspicuously mum on his company's monetization plan, however.
"Facebook has the potential because of its audience penetration to be the first company to crack this mobile strategy nut," Ms. Parrish said. "The focus on integrating their features and functionality on other people's operating systems lets the company focus on reaching as many people as they can, rather than hitching their wagon to one platform.
"Facebook can use its reach and scale to potentially achieve a new level of mobile interaction, which would be very exciting if it comes to fruition," she said. "Who knows? Facebook might as well be the company to figure it out."
Should other companies look at Facebook as a threat, or as a potential partner?
The answer, in many cases, is both.
"In an ideal world, no one would be freaking out about it, because Facebook could be partnering with other companies in a more robust way," Ms. Parrish said. "At the Facebook Places launch, it had a lot of partners up on stage, and I would like to see a lot more cooperation in the mobile space.
"That would provide more options for Facebook, marketers and consumers as well," she said.
Mobile-social behavior
Facebook has made it clear that Apple's iOS and Google's Android operating system are its top priorities in terms of its mobile development plans.

Facebook has applications for both platforms, and there is a touch-interface-optimized mobile Web site. In addition, both operating systems support Facebook contact syncing.
Facebook has said that it has plans to tap HTML5 to develop for other platforms such as Research In Motion's BlackBerry, but that is not as high on its list of priorities.
"I understand not focusing on BlackBerry as much—it is more of a business device and BBM [BlackBerry Messenger] dominates its social use," said Allison Mooney, director of emerging trends at Omnicom Group's MobileBehavior, New York. "I do think they should have awesome apps on as many platforms as possible, but they should devote a lot of energy to the mobile Web, which they did with Facebook Lite and now Facebook Zero.
"As network speeds get faster, these will become an increasingly popular point of access and they have the benefit of working on any device," she said. "I also think the focus on bundling its services into mobile software is a smart move.
"This will make it easier for developers to incorporate Facebook into their apps, which is obviously a win for Facebook and part of their larger strategy."
Mobile social applications should be thinking about Facebook and focusing on what can make their own products unique and valuable.
In terms of monetization, Facebook mobile ads can be even more contextually targeted by adding location into the mix.
Facebook Places can also get a lot more historical user data—not just where they are now, but where people have been in the past.
"This can help create much richer profiles of their users—something that is very valuable to advertisers," Ms. Mooney said. "They can also help Place owners learn more about their clientele, and then offer these businesses new marketing products such as  coupons, specials, loyalty points, etcetera.
"And in general, the more people use Facebook, the more data they get, the more opportunities to monetize it," she said.
The phone has really always been a social device, especially for young people—they use it to communicate with friends and family.
And with Facebook as one of their primary platforms to socialize, it makes perfect sense to make it more accessible on any phone.
"I think the goal of making everything social and lowering barriers to Facebook access on any mobile device is very smart," Ms. Mooney said.
"Youth in the U.S. and people in emerging nations often use mobile phones as their primary point of access to Facebook and the Web, so anything they can do to optimize their mobile experiences will benefit these huge user bases," she said.
 
http://www.mobilemarketer.com/cms/news/social-networks/7499.html