Making money with mobile; the Facebook conundrum.
“It’s free and always will be.”
Bold promises like the one above have become all but standard practice from the folks over at Facebook. In the short history of what is now the hands-down global social leader, the company has made a habit of following through on its lofty predictions. However with this week’s IPO looming and the recent admissions from within that the social giant is having trouble monetizing its mobile network, the question of whether or not Facebook will in fact always be free seems to be up in the air.
It is no secret that mobile is a primary initiative at Facebook. Moves like the purchase of Instagram (possibly Facebook’s biggest mobile photo sharing competitor), the introduction of the mobile test suite Ringmark, and the introduction of its very own app market, all emphasize that Mr. Zuckerberg and company know how important going mobile actually is. Just to drill the point home, this week Facebook’s wunderkind CEO came right out and told the world that not only is mobile a major initiative, it is the primary initiative for the social juggernaut.
Despite such a blatant public focus on mobile as the next generation of Facebook, there seems to be plenty of skepticism about Facebook’s ability to be successful in the mobile space. Numerous amendments to the prospectus the company issued coupled with a CEO that is always raising eyebrows for breaking the mold, have plenty of potential investors worried.
So are their fears founded? That remains to be seen, however there are plenty of red flags. For one, Facebook currently makes a huge chunk of its revenue from sponsored ads. These ads, while effective in the PC medium, do not translate well to mobile. Facebook mobile users are primarily interested in chatting or sharing things like photos and status updates. Interrupting these activities on the small screens of mobile devices can risk driving many users away. Facebook has grown into the behemoth it is today by keeping the social experience simple and direct. Naturally, disrupting the mobile experience is not ideal.
Aside from ads, the next most logical way to make consistent profit over time would be to break the company’s long-standing promise and simply charge users a fee. Obviously this is not likely to happen as long as Mark Zuckerberg is at the helm, unless a radical philosophical shift takes place.
While the company is perched to see a major influx in revenue in the short term thanks to this week’s IPO, how without ad revenue or subscription fees does Facebook actually stand to be profitable in the long run? The most likely answer here is that the company will do what it has always done; get creative.
Over the past few weeks Facebook has rolled out a seemingly daily stream of initiatives and programs aimed at building a solid future for the company. The aforementioned app market, for example, stands to unify the app experience across all devices and pad Facebook’s mobile revenue. The company has also just begun testing a program in which users can pay to promote posts by highlighting them in followers’ feeds. These small initiatives may not be cure-all solutions, however they may be the building blocks for long-term profit strategies for one of the world’s most influential companies.
The way we see it, the ball could roll a number of ways for Facebook’s future. Maybe Facebook’s tactics will work and the social king will become the mobile ruler as well. Perhaps mobile will prove to be the hurdle Facebook can’t quite clear and a flashy newcomer will emerge to take the throne. The company could even get antsy with Mark Zuckerberg’s eccentric ways and we could see an Apple-like coup to remove him from power.
The only thing we can be sure of now is that in order to stay afloat in this unified web world, Facebook will need to find a way to capitalize on mobile. For now, there is a golden apple the size of Jupiter hanging right outside of Facebook’s reach. All that’s left to do is take a bite.
Let us know what you think is in store for the social giant and while you’re at it, why not check out our page as well as connect with us on Twitter @fiddlefly, Google+, LinkedIn, and Pinterest.
