Facebook is missing out on a big opportunity to turn its biggest challenge - mobile monetization - into one of its biggest revenue sources.
It's way beyond passé or even cliché to pile on Facebook in light of its recent IPO stumble.
Some have credited the post-IPO fall to the effectiveness of its ads. Some have even said that its ad-buying interface is clunky. More people have suggested that social media and advertising don't make good bedfellows.
Michael Greene, a senior analyst at Forrester Research, represents a different opinion. As he noted in this week's article in AdExchanger, "If anything, the publicity around Facebook's mobile challenges brings to light what has become a very open secret among digital publishers - mobile isn't a great advertising business. And it won't be any time soon, either."
The lag in mobile advertising growth is by no means just Facebook's problem. As more and more consumers adopt mobile platforms and move even more of their content consumption to devices that have 4-inch screens, the ratio of display-mobile impressions is going to tilt more toward mobile every year. Unfortunately for advertisers and publishers alike, the cookie-deprived mobile environment just isn't the same as the desktop. And with the increase in smartphone adoption driving more web activity onto handhelds, all signs point toward this trend only intensifying.
Mobile is a double-edged sword for publishers and advertisers. It can put app- and location-specific ads in the palm of your hand. The omnipresence of mobile devices means more time for content consumption. But on the other hand, mobile has made it very difficult for publishers to monetize the one thing that has been relatively plentiful on the larger format desktop computer - impressions. Mary Meeker showed in her latest eye-opening presentation that time spent in mobile outpaces ad spend 10 to one. Many experts expect this gap to close, and the mobile advertising market to balloon from the $1 billion it is today to $15 or even $20 billion dollars in the next five years. However, the real estate for in-app ads and mobile web just doesn't stack up against desktop display. So does it really make sense to predict that mobile ad spend should follow the Internet's growth pattern?
Facebook has already seen the effect: as its user base has increasingly gone mobile it hasn't been able to monetize as effectively as those on its desktop experience. In fact, the Facebook mobile experience basically delivers no impressions whatsoever - which means it delivers no revenue either. That's a big problem. And Facebook's not alone.
This is where email comes to Facebook's - and the publisher's - rescue.
One of the things that email can do, probably better than any other medium, is deliver immediacy. Whether it's a retailer tempting you to buy some new shoes or gadget, or a publisher email that is grabbing your attention with a breaking news alert, email pushes you what you're interested in.
And are people interested in anything more than themselves?
Facebook is missing out on a big opportunity to turn its biggest challenge - mobile monetization - into one of its biggest revenue sources. All it needs to do is put a single, behaviorally or personally targeted ad into the "Someone tagged you in a photo" or "You have a new message" alert email, and voila, narcissism does all the rest.
We know that email ads work. The success of retail email is proof positive. We see click-through rates on email ads greater than 0.3 percent - almost 10 times that of display.
We know that Facebook has tons of behavioral data about you, what you like, and who your friends are. It uses that data to show you ads on the web, so what if it harnessed that to direct a single, targeted ad to you when you opened your notification email? I bet you'd be paying attention.
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As president of LiveIntent, Dave Hendricks has overall responsibility for revenue, finance, legal, and operations. Prior to joining LiveIntent before its 2009 Series A, Dave was EVP of operations at PulsePoint (then known as Datran Media), where he worked with LiveIntent founder and CEO Matt Keiser and ran Datran's ESP StormPost. Before all that, Dave held senior roles at data management companies InfoUSA and Experian. A member of the founding executive team at ExperianCheetahMail, Dave began his email adventure at Pioneering ESP MessageMedia after running global partnerships for Oracle Corp. Dave was named one of Silicon Alley Insiders Top 100 technologists in 2011 and is active in several IAB Committees including Mobile and Email. Follow him on Twitter @davehendricks.
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