Why Facebook will be a major player in mobile advertising

While still a relatively small part of the advertising industry, mobile advertising has been growing year after year and has now entered mainstream media as big players are fighting for a piece of the pie.

The latest entry into the space, joining the likes of Google and Apple, is social media giant Facebook. The planned IPO has highlighted what is one of the risk factors but also probably the largest growth opportunity for the company, the development of a mobile strategy, which some early reports are now valuing at about $2B in the first year just from mobile advertising. To put this number into context, 2011 mobile advertising revenue has been somewhere between $3B and $5B (depending on analyst), therefore Facebook would be contributing to about 50% total industry growth in their first year.

While Facebook has successfully monetized online access through advertising and payment of virtual goods, no such a thing exists on mobile. With 425 million Facebook users on mobile (about 50% of the entire Facebook user base) this is certainly a space to watch and Facebook has admitted they will start inserting advertising the first quarter of 2012. While this will have global impact, it will certainly be of even more interest in Asia-Pacific, where the number of people accessing internet on their mobile phone is much higher than the ones accessing through their laptops or PCs.

With Google accounting today for about 50% of the total mobile advertising revenue, the big question is whether Facebook will become a major player in the ecosystem. We believe this will be the case and will try to explain the reasons why:

1. Reach: advertisers want to reach as many people as possible. While the mobile channel promises to reach everyone, in reality mobile advertising has been a very fragmented space so far, with many different offers, from different players using different technologies, making the planning of mobile advertising campaigns a daunting task. Facebook promises to reach hundreds of millions of people, through one platform across different type of devices. It does not matter whether you are using Android, Apple iOS, Nokia, RIM or a feature-phone, Facebook ads will be delivered to you seamlessly.

2. Targeting: the capability of selecting specific user segments is of vital importance to both advertisers and consumers. The first want to be able to reduce wastage by addressing only their relevant audience. The latter want to receive campaigns that are relevant to them and can add value to their lifestyle. Arguably, there is no other platform that has the same amount and accuracy of consumer data as Facebook. Besides demographic and interest data, users upload pictures (about 250 million per day), engage with brand pages, articles, activities through likes and comments (about 2.7 billion/day) and check-in at venues. All of this provides a very useful social context certainly of great value to the advertising community. Surely, Facebook will have to find a clever and non-intrusive way to deliver ads on mobile, in order not to upset their customers’ experience, but we believe they have the talent and the resources to achieve such a goal.

3. Familiarity: let’s face it, in advertising (as in any other industry really), decision makers feel always safer to follow what others are doing. Being innovative and disruptive can pave the way to glory but also to being sacked if your boss is not as open-minded. Agencies and brands already spending significant amount of their online budget on Facebook ($3.1 billion in 2011) will find the transition to mobile much smoother and less risky than embarking in new mobile media altogether. This will lead to an increasing shift of mainstream digital budgets to mobile, which will benefit the entire industry.

In conclusion, we believe Facebook will take a leading role in the mobile advertising ecosystem and will fight for the lion share with Google. Should the forecast of some analysts prove true, Facebook could account for over 30% of the total mobile advertising revenue by the first quarter of 2013, raising the bar and benefiting the entire mobile advertising industry.

Guest Post by 

Fabrizio Caruso (Linkedin Bio)
@fabriziocaruso (Twitter handle)

Fabrizio is a mobile media executive with extensive experience across multiple markets, including EMEA, APAC and North America. Fabrizio currently holds a position as the Managing Director of Asia Pacific at Out There Media, a leading global mobile advertising company. Prior to joining Out There Media he held the position of Managing Director, Southeast Asia, Shanghai and Manila at Buongiorno Hong Kong, while his previous professional roles include senior positions at companies including Amdocs, Qpass, Epok Inc and T-Mobile International. Fabrizio regularly feature as a speaker at industry conferences and author contributed articles published in various trade magazines and websites.
He tweets about mobile media at @fabriziocaruso


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