Facebook looks to make mobile click 2012-2-7

Facebook looks to make mobile click  2012-2-7

By Tim Bradshaw, Digital Media Correspondent

Reuters

When Facebook starts offering marketers the chance to highlight their messages in smartphone apps and other mobile devices in the run-up to its initial public offering, it will begin to tackle a problem that has flummoxed more established tech companies: how to make sure ad revenue is not lost as use of their services shifts to smaller screens.
The mobile marketing industry has been growing fast in recent years, with analysts at Informa Media & Telecoms estimating global market growth of 51 per cent in 2011 to $5.3bn. However, mobile advertising today remains a minor portion of brands’ total digital marketing spend in spite of aggressive drives into the sector by Google and Apple.

More

On this story

• In depth Facebook
• Facebook chief faces tax bill of $1.5bn
• Sheryl Sandberg A social, networked executive
• Facebook millionaires eye new exploits
• Open letter Look before you leap, Mr Zuckerberg

IN Media

• Facebook to tap mobiles ads
• Reuters journalists plan two-day strike over pay
• Clear Channel floods world with Madonna
• Regulators probe sale of Mecom’s Norway business

“No one has cracked mobile advertising,” says Christian Lindholm, a former Nokia designer who is now chief innovation officer at Fjord, a digital consultancy. “The fundamental problem is the lack of screen real estate.”
Traditional banner ads – the widespread but low-value format used by most websites – “aren’t going to pay for the orchestra to play” on mobile, Mr Lindholm says.
Facebook is expected to opt for its own unique ad format on mobile, as it has throughout its site.
“Featured stories” is likely to be Facebook’s first mobile marketing format of many, potentially including “rich media” such as video and potentially exploiting the narrow geographical targeting of its users.
In November 2010, Facebook launched Groupon-style “check-in deals” where users register their location with a business via its smartphone app, but brands have been slower to adopt them than its other ads.

Getting permission for more personalised forms of mobile marketing will be crucial if Facebook is to avoid upsetting users, says Alexandre Mars, chief executive of Publicis Groupe’s mobile agency, Phonevalley. “They know a lot of things about you – how and when they can start using them and whether you will be OK or be annoyed – that will be their challenge.”
Getting the go-ahead from users for location-targeted ads on phones will need to be “much more clear” than just adding it to Facebook’s existing, lengthy privacy policy, Mr Mars adds. But offering a more sophisticated form of mobile advertising is essential if Facebook is to boost the rates it can charge brands.
Facebook is not alone in facing this challenge. Apple’s 2010 launch of iAd, which allows advertisers to launch sophisticated video or animated ads from a banner in iPhone or iPad apps, has been a rare false start for the company.
Last month, Apple hired a former Adobe and Yahoo executive, Todd Teresi, to reinvigorate iAd, which has lost out to Admob, which Google acquired for $750m in 2010. Google had a 52 per cent share of the US mobile ad market in 2011, according to analysts at Emarketer, compared with just 6.4 per cent for Apple, its nearest rival.

Facebook

In-depth news and analysis on Facebook as the social network takes the first step towards its stock market debut

Searches on mobile devices where Google can show ads doubled during last year, as it introduced new ad formats such as allowing users to “click to call” local businesses.
But even Google is struggling with its inability to charge as much for mobile search ads as it does on the desktop web, a discrepancy which contributed to an 8 per cent decline in the company’s overall cost-per-click rates in the fourth quarter of last year.
Fewer people purchase items using their phones, analysts say, so advertisers are not willing to pay as much to reach those users in spite of the increasingly substantial time they spend on the mobile internet. Facebook may suffer a similar dilution in pricing when it rolls out mobile ads, analysts warn.
Facebook’s leadership has not emphasised mobile as a priority for the company as strongly as Google’s, notes Mr Mars. “It’s important it comes from the top of the organisation.”
But when Facebook does enter the mobile market, it could help to accelerate a shift towards personalised, targeted ads, says Rob Jonas, vice-president for Europe, Middle East and Africa of independent ad network InMobi – rather than ads based on the app or website they happen to appear on.
“It’s something that’s been talked about for quite some time and is now starting to become more of a reality and more effective,” he says.
That could be more lucrative than search or banners, Mr Jonas says, as well as being more palatable for users.
“As long as you are creating relevant content, it will be a good user experience,” he says.

Copyright The Financial Times Limited 2012. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.