Facebook eyes 'massive opportunity' with mobile

With one billion users and a shift to mobile use primarily, analysts say monetizing mobile is key, however

Just having logged its one billionth user, Facebook now is looking forward to its biggest money-making strategy: mobile.

However, that won't be an easy task for the social networking company.

While figuring out how to make money off of mobile users is a tough job for any Internet company, it's something that Facebook has characterized as one of its biggest challenges.

"Figuring out how to do that has really been elusive," said Brad Shimmin, an analyst with CurrentAnalysis. "People want simplicity and speed on mobile, and advertising gets in the way of that... [Mobile users] are trying to quickly get information while they're on their way somewhere. So you can really alienate them because they have no patience."

And that's a big deal, because this past May industry tracker comScore reported that Facebook users now are spending more time accessing the social network from their mobile devices than they do from desktop browsers.

Facebook CEO Mark Zuckerberg talked about the importance of mobile to Facebook's strategy in an interview with Businessweek published Thursday.

Zuckerberg said mobile was a "massive opportunity" for Facebook. "The big thing is obviously going to be mobile," Zuckerberg said. "There are 5 billion people in the world who have phones, and a billion people using Facebook. There are actually already 600 million people using Facebook on phones, so that's growing really quickly."

Discussing the company's limp initial public offering (IPO) and stock price, Zuckerberg again brought up mobile, saying figuring out how to monetize mobile is going to be one of the bets he'll be making.

"A lot of it over the next few years is going to come down to mobile," he told Businessweek. "We already know that people who use Facebook on mobile use it more, spend more time on it."

What Zuckerberg didn't talk about was how Facebook is going to monetize mobile. And industry analysts say part of the reason for that may be that he's actually still trying to figure it out.

"The problem is no one other than Google is getting mobile advertising to work and with Google only through traditional search," said Rob Enderle, an analyst with the Enderle Group. "It is an issue with the device. It doesn't lend itself to traditional forms of advertising... The screen is simply too small and the potential for user aggravation too high."

This has been an issue that has been plaguing Facebook for some time now. During the company's pre-IPO road show this past spring, investors and analysts raised concerns about how Facebook will generate revenue from the growing number of users who are accessing the social network via their mobile phones and tablets from cafes, gyms and town parks.

And in a filing with the U.S. Securities and Exchange Commission, Facebook admitted that users' shift from traditional desktop or laptop computers to mobile devices was hurting the company's advertising plan. In the filing, the company also noted that it had no way to monetize the growing mobile trend.

Facebook even listed mobility as one of its pre-IPO "risk factors."

Shimmin said Facebook needs to tackle mobile advertising very carefully.

"In some ways it's a real estate issue and an expectation issue," he said. "When you're sitting at your desk... it's easier to swallow the advertising that's in front of you. But that gets in the way when you try to translate that experience to the mobile platform with a smaller screen and people on the go. This can be a very dangerous game to play. Every advertisement takes away from the usability of your product."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her email address is sgaudin@computerworld.com.

See more by Sharon Gaudin on Computerworld.com.

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Copyright © 2012 IDG Communications, Inc.

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