The shadow hanging over Facebook since it filed to go public in February and looming larger in the lead-up to its IPO is its struggle to monetize mobile. The social network admitted as much in a regulatory filing in May, and CEO Mark Zuckerberg told investors then that beefing up Facebook’s mobile app was his top priority. That has extended companywide to the point that Facebook has decentralized its mobile team and seeded its members within other teams to ensure that all products are mobile-native, according to sources. Facebook declined to comment.
Over the last month, Facebook has been stressing its mobile-first strategy in meetings with advertisers and agencies, sources said. With 488 million monthly active users on mobile in the first quarter, it presents a solid revenue stream to Facebook. The company only began showing ads on mobile in April—and started letting advertisers run mobile-only campaigns in June—and early reports suggest the channel’s a win. Last week social ad firm TBG Digital said Facebook’s mobile ads nab a 1.14 percent CTR on average whereas Sponsored Stories on the desktop site average 0.83 percent. Other companies are seeing an even larger divide in favor of mobile. AdParlor said this week that CTR for Facebook’s mobile ads are 15 times higher than desktop ones with a 30 percent lower cost-per-click.
Chris Tuff, svp and director of earned and emerging media at 22squared, said that clients’ mobile ads are seeing between 4 percent and 6 percent clickthrough rates, and that a recent campaign for the Costa Rica Tourism Board notched a 6.4 percent CTR with a $0.12 cost-per-like. “I love how Facebook is getting so much flak for not understanding mobile. It’s like no, actually this is the best ad product we’ve seen in years,” he said.
Marketers had been wanting to run ads within the News Feed, so “it’s not surprising that initial reports are showing that ads are performing so well,” said David Berkowitz, vp of emerging media at 360i. And if clients see success with mobile ads on Facebook, it could spike their interest in mobile marketing in general “because Facebook is such a time-suck for people,” he said.
Success in mobile is especially important for Facebook as its revenue from social gaming is likely on the wane. Zynga, the premier social gaming company, directly contributed to 11 percent of Facebook’s first-quarter revenue, but yesterday Zynga reported that its second-quarter revenue came up way short of Wall Street estimates. That shortfall is expected to impact Facebook’s second-quarter revenue, which the company will report later today.
Q2 2012 is the first period during which Facebook generated revenue from mobile, and Berkowitz said he hopes to hear more about its performance during this afternoon’s earnings. “I’m very curious to see how much they dive into mobile in detail and what they’re going to break out, not just impressions but performance and how well those match up with other reports that have been out there. In general, marketers are looking for more justification for their ad spending,” he said.