Facebook says it's conquered mobile; analysts say there's more work to do
- 31 January, 2013 19:54
Less than a year ago, Facebook acknowledged that it had to improve its ability to generate revenue from its mobile users or face a tough future. Today, executives are calling Facebook "a mobile company."
Are those claims true?
Did Facebook, in just eight months, conquer one of its biggest hurdles?
Analysts say that while Facebook has made some impressive advancements in the mobile in recent months, its work is far from over.
"What they've done is very, very encouraging. It clearly shows that they're focused on mobile," said Brian Blau, an analyst with Gartner, Inc. "They've made some progress, but I don't think what they've done so far is a conquering event."
Facebook still faces business risks if the improvement doesn't continue. As users increasingly bypass desktops and laptops for smartphones and tablets, online companies will have to figure out how to generate significant mobile revenue if they're going to survive.
"Mobile is still a risk for Facebook," Blau said. "I don't think that's going to go away. Users are moving to mobile no matter what Facebook does. They've got to figure out how to meet them there. If they don't keep going in the direction they're heading, even for one quarter, they're in trouble."
During the company's fourth-quarter and year-end earnings call late yesterday, Facebook co-founder and CEO Mark Zuckerberg declared: "Today, there is no argument. Facebook is a mobile company."
The statement came about eight months after Facebook said in a pre-IPO amended filing with the U.S. Securities and Exchange Commission that mobile computing was one of the biggest risks to its potential success.
Industry analysts at the time were quick to note that Facebook was struggling to monetize its fast-growing stable of mobile users.
During Wednesday's call, executives said that the number of Facebook's monthly active mobile users jumped 57% from a year earlier to 680 million in the fourth quarter of 2012.
Facebook said that it now has more users accessing it from mobile devices than from the Web.
Most important, executives said, mobile accounted for 23% of Facebook's ad revenue in the fourth quarter, up from 14% in the third quarter and zero at the beginning of last year.
"One of the biggest knocks on Facebook was that they weren't able to build a successful mobile strategy," said Dan Olds, an analyst at Gabriel Consulting Group. "It has changed mobile revenue from a rounding error to almost a quarter of its revenue. Facebook and Zuckerberg have done a pretty good job of patching up what used to be the biggest weakness - mobile."
During the call, Zuckerberg said that Facebook this year is focused on building new "mobile-first experiences" He didn't offer any details about what the "mobile-first experiences" might entail.
Analysts note that in addition to the increasing mobile revenue, Facebook proved that it can can take on a major challenge.
"The mobile revenue is very significant," said Olds. "First, it shows Facebook is becoming a much larger player in the fastest growing segment of online advertising. But second, and maybe as important, it shows that Facebook, as a company, can set objectives, come up with good winning strategies, and execute."
One of its best moves, analysts say, was coming up with what has become a highly popular Facebook mobile app that's been downloaded onto a huge number of smartphones and tablets.
Now, says Blau, Facebook needs to focus on improving its mobile and desktop ad strategy.
"They need to improve their advertising formats," said Blau. "I can tell you that the selection is limited now. There's a lot more they can do. They need to do more than just provide links and display ads. It needs to be more engaging than that. They need to give ads more depth and content."
Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, or subscribe to Sharon's RSS feed . Her e-mail address is firstname.lastname@example.org.
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