Facebook moves to remedy mobile revenue woes

Social network launches test of new ad system and seeks help from developers of Facebook apps

By , Computerworld |  Business, Facebook

Facebook is moving to fix one of its biggest problems - finding ways to make money from its growing base of mobile users.

The social network Wednesday said that it's trying out a new mobile ad system and is calling on Facebook app developers to help out with the beta test.

"Today we're announcing a new way for mobile app developers to grow their business with an ad unit that helps them reach and reengage their users," Facebook engineer Vijaye Raji said in a blog post. "In the past 30 days, [Facebook] has sent people to the Apple App Store and Google Play 146 million times, via clicks from channels. Mobile ads are an additional way to drive people to apps."

Industry analysts say it's a good sign that Facebook is tackling the issue of mobile ads, but added that the company must move quickly to complete the test and get the system up and running -- and generating revenue.

During the run-up to Facebook's initial public offering, analysts and investors expressed concern over the company's inability to generate significant revenue from the growing number of users accessing the network via mobile devices.

In fact, a comScore report released in May showed that more Facebook users are accessing the social network from mobile devices than from browsers.

Facebook acknowledged in a pre-IPO filing with the U.S. Securities and Exchange Commission that its "daily active users [are] increasing more rapidly than the increase in the number of ads delivered."

In the filing, Facebook listed mobility as a "risk factor" for investors, and admitted that it had no way yet to monetize the mobile users.

"Facebook definitely has to do something to get some value out of their mobile user base," said Dan Olds, an analyst at Gabriel Consulting Group. "Facebook users are increasingly using smartphones to access their pages and, until now, Facebook hasn't had much success in getting ads in front of those eyeballs."

He also pointed out that the company has to walk a fine line to keep mobile ads from being too intrusive, which could drive users to other networks.

"This is a double-edged sword," Olds said. "If the [ad] frequency is too high, users will protest and, over time, will use Facebook less on mobile devices. If it's not frequent enough, then there might not be enough impressions to make it worth the money for advertisers."


Originally published on Computerworld |  Click here to read the original story.
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