Facebook says it's conquered mobile; analysts say there's more work to do
Zuckerberg tells investors 'Facebook is a mobile company,' but others note that company must improve ad formats first
Computerworld - Less than a year ago, Facebook acknowledged that it had to improve its ability to generate revenue from its mobile users or face a tough future. Today, executives are calling Facebook "a mobile company."
Are those claims true?
Did Facebook, in just eight months, conquer one of its biggest hurdles?
Analysts say that while Facebook has made some impressive advancements in the mobile in recent months, its work is far from over.
"What they've done is very, very encouraging. It clearly shows that they're focused on mobile," said Brian Blau, an analyst with Gartner, Inc. "They've made some progress, but I don't think what they've done so far is a conquering event."
Facebook still faces business risks if the improvement doesn't continue. As users increasingly bypass desktops and laptops for smartphones and tablets, online companies will have to figure out how to generate significant mobile revenue if they're going to survive.
"Mobile is still a risk for Facebook," Blau said. "I don't think that's going to go away. Users are moving to mobile no matter what Facebook does. They've got to figure out how to meet them there. If they don't keep going in the direction they're heading, even for one quarter, they're in trouble."
During the company's fourth-quarter and year-end earnings call late yesterday, Facebook co-founder and CEO Mark Zuckerberg declared: "Today, there is no argument. Facebook is a mobile company."
The statement came about eight months after Facebook said in a pre-IPO amended filing with the U.S. Securities and Exchange Commission that mobile computing was one of the biggest risks to its potential success.
Industry analysts at the time were quick to note that Facebook was struggling to monetize its fast-growing stable of mobile users.
During Wednesday's call, executives said that the number of Facebook's monthly active mobile users jumped 57% from a year earlier to 680 million in the fourth quarter of 2012.
Facebook said that it now has more users accessing it from mobile devices than from the Web.
Most important, executives said, mobile accounted for 23% of Facebook's ad revenue in the fourth quarter, up from 14% in the third quarter and zero at the beginning of last year.
"One of the biggest knocks on Facebook was that they weren't able to build a successful mobile strategy," said Dan Olds, an analyst at Gabriel Consulting Group. "It has changed mobile revenue from a rounding error to almost a quarter of its revenue. Facebook and Zuckerberg have done a pretty good job of patching up what used to be the biggest weakness - mobile."
During the call, Zuckerberg said that Facebook this year is focused on building new "mobile-first experiences" He didn't offer any details about what the "mobile-first experiences" might entail.
Analysts note that in addition to the increasing mobile revenue, Facebook proved that it can can take on a major challenge.
"The mobile revenue is very significant," said Olds. "First, it shows Facebook is becoming a much larger player in the fastest growing segment of online advertising. But second, and maybe as important, it shows that Facebook, as a company, can set objectives, come up with good winning strategies, and execute."
One of its best moves, analysts say, was coming up with what has become a highly popular Facebook mobile app that's been downloaded onto a huge number of smartphones and tablets.
Now, says Blau, Facebook needs to focus on improving its mobile and desktop ad strategy.
"They need to improve their advertising formats," said Blau. "I can tell you that the selection is limited now. There's a lot more they can do. They need to do more than just provide links and display ads. It needs to be more engaging than that. They need to give ads more depth and content."
Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, or subscribe to Sharon's RSS feed . Her e-mail address is email@example.com.
- Why the social networks are falling apart
- Now is 'good timing' for Twitter's IPO
- Facebook to test new mobile payment service
- Facebook embedded posts good for business
- Facebook gets its mobile game on
- Who said that? Social network launched for anonymous users
- The social network wars are over. The winner: email!
- State social media privacy laws a mixed bag for businesses
- Facebook rethinks its 'hackathons' with an eye toward mobile
- How companies should navigate social media in a crisis
Read more about E-business in Computerworld's E-business Topic Center.
- 6TB Oracle Ecommerce Stack Deployed on AWS in 7 Days A Fortune 1000 company was told that it would take more than 6 months to deploy their ecommerce stack on AWS. CloudVelocity deployed...
- Agility & Scalability for Oracle EBS R12 and RAC on VMware vSphere 5 This white paper outlines extensive performance and scalability testing of Oracle EBS applications on a Vblock™ Systems with vSphere 5.
- Oracle and VCE: The Next Step in Integrated Computing Platforms In this ESG Lab review you will learn how a VCE system driven by Oracle, delivers the perfect blend of high performance and...
- Migrate Oracle Apps from RISC/UNIX to Virtualized x86 Ready to move Oracle to a virtualized environment? This brief explains how true converged infrastructure can help you migrate from a RISC/UNIX environment...
- Keep Servers Up and Running and Attackers in the Dark An SSL/TLS handshake requires at least 10 times more processing power on a server than on the client. SSL renegotiation attacks can readily...
- On Demand: Mastering the Art of Mobile Content Management Mobile device usage in the enterprise has skyrocketed, and it continues to escalate. IT must answer to users who demand access to their... All E-business White Papers | Webcasts