Facebook, the social media giant that has already made a large dent in the mobile ad ecosystem, today showed it has no plans to stop the momentum: Welcome, Audience Network.
Before today, there were already several factors working in Facebook’s favor: its reach among avid social users, its engaged and captive audience, and its trove of affinity data, which my colleague Nate Elliott talks more about in his blog post here.
After its Audience Network announcement today, Facebook is breaking the application of its tools and its data out of its own silo, and this could benefit several players:
Other developers and publishers could make more money by offering Facebook data-infused mobile ads.
Advertisers can dip into Facebook’s rich affinity data to target their ads across other mobile properties.
And of course, Facebook itself just extended its potential revenue base and faces a new competitive set with the likes of Google AdMob and MIllennialMedia.
A lot of people have been talking about Facebook’s new Nearby Friends feature for their mobile app, which gives users the ability to see which friends are nearby. But less discussed, and perhaps just as significant, is another change — to a more contextually-relevant Facebook profile.
In the past, when you checked out other users’ profiles, you would see the same static information including their profile photo and links to their friends and “about” pages. There were two problems with this. First, the information is rarely updated, so it becomes stale. Second, if you don’t know the person, it takes a bit of digging through their pages to find out if you know them or have anything in common.
The Facebook iPhone app’s recent update addresses these concerns by taking a contextual approach. Specifically, it presents more personalized and dynamic information, such as whether you and this person share any mutual friends, whether you happen to live in the same city, and what the friend has been up to recently. The app also prioritizes this information, so it’s one of the first things you see after you click on a user’s profile.
In fact, we’ve seen this trend in mobile apps — the best apps are moving away from static web-like experiences and are delivering more personal, relevant content, fast. In my report, "The Best And Worst Of Mobile User Experience," I found that leading mobile user experiences share common attributes that separate them from the pack. These leading experiences:
The vast majority of Facebook and Twitter usage is coming from mobile devices, and both companies generate a significant proportion of their revenues via mobile ads (53% for Facebook and more than 70% for Twitter end Q4 2013).
Facebook is splitting into a collection of apps (Instagram, WhatsApp, Messenger, Paper, etc…) and likely to announce a mobile ad network at its F8 developer conference in San Francisco in a couple of days. While failing brand marketers, according to my colleague Nate Elliott, Facebook is increasingly powerful at driving app installs for gaming companies and performance-based marketers who have a clear mobile app business model.
Facebook today announced a new optional feature– the ability to see which friends, or friends within a created group, are nearby. The social network is smartly looking to better serve its members who have made the mobile mind shift, expecting to get what they want in their immediate context and moment of need. In this case – knowing when a friend is nearby.
Prviacy will be a concern with this feature, but users are protected by opt-in’s and by only mentioning how close someone is, not their specific location. Connecting directly in person requires a number of steps including messaging and permission. A few thoughts:
1) This isn’t original, but Facebook has a better shot at success than the original services.
About 10 years ago, Sam Altman started a company called Loopt that he sold about two years ago to Green Dot for $43.4M. It started out as friends connecting, but eventually needed to make money. Mobile advertising wasn’t a big market 10 years ago – in fact, it is still somewhat small today. But Facebook has two key advantages now: first, they have more than one billion users so they don’t have to recruit (and many of my friends will already have the app on their phone). Second, they don’t have pressure to make money near term. Facebook will win if even 5% or 10% of their members adopt.
Google acquired Nest for billions, and then Facebook spent several more billion on Oculus VR. We’re only a few months into 2014, and already billions have been spent by some of the world’s largest digital players, with each of these companies eager to own the next big thing. Mobile is right here, right now, but everyone knows that very soon, there will be something else. But what else?
In the battle to find and claim the next device that everyone will want, these companies will soon realize that next big thing is not a thing at all: It’s your voice.
Voice control suffers from the same things plaguing augmented reality or virtual reality: It has been around for so long that we think we know what it is. Any fan of Star Trek: The Next Generation knows that voice control involves invoking an invisible computer with a command, “Computer,” followed by a query, “How many Klingons does it take to screw in a light bulb?” Maybe that’s a question you don’t want the answer to, but the computer — as voiced by Majel Barrett in the TV series — would know it.
It’s possibly a long history of popular depictions of voice control that made us collectively show so much enthusiasm for Siri when Apple first debuted it in 2011. It’s also partly to blame for why we quickly turned on Siri, declaring her soothing semi-robotic tones to be merely amusing at best or irrelevant at worst.
When Microsoft recently announced its long-rumored Cortana voice service for Windows Phone 8.1 as a catch-up to both Siri and Google Now’s own voice interface, the interest was modest, perhaps because if Siri hasn’t changed the way millions of Apple users use millions of Apple devices, how can Microsoft initiate a wave of behavior change when it has so few Windows Phone users?
Facebook’s purchase of WhatsApp shows that the market for messaging is far from dead. But it’s just gotten worse for the telcos. We’ve already discussed the underlying reasons in a report — but the fact that Facebook put $19 billion on the table, of which $4 billion is in cash, for a global messaging service with 55 staff should scare telcos, with their millions of employees and high-cost structures. Over-the-top communications tools like WhatsApp, Line, KakaoTalk, WeChat, and Viber (which itself was bought a few days ago by Rakuten) have pushed telcos further and further away from any meaningful customer engagement.
To be sure, WhatsApp is about much more than instant messaging; it’s about content sharing — which is an emotional activity. Such emotional activities are critical to closer customer engagement. As the online giants use ever more granular user analytics to cement their position as marketing powerhouses, telcos’ hopes of developing new revenue streams from analyzing user behavior are slipping away faster and faster. This is what makes the deal so dangerous.
Of course, it’s tough to justify the deal simply on the basis of WhatsApp’s revenue model of $1 annual subscriptions. In my view, the deal is really about:
Bringing a major competitor into your family. Otherwise, someone else could have lured WhatsApp into theirs. The deal, which accounts for about 10% of Facebook’s market capitalization, could be seen therefore as an insurance cover.
This week, Facebook announced its rollout of auto-play advertising videos – starting with a teaser for the upcoming movie Divergent. The video ads automatically start playing, without sound, when they appear. Users can click on the video to view it with sound or scroll past it if they aren't interested.
Video definitely has the future. In a blog post by my colleague Michael O’Grady last year, he revealed that video was the fastest-growing digital content category. The Forrester Research Online Display Advertising Forecast, 2013 To 2018 (Western Europe) shows that European Internet users spent 68% of their online time in 2012 watching online videos, and we expect more than 90% of the online population to watch online video regularly by 2017. As a result, video advertising will account for a third of total display advertising spend in 2018.
How much stuff do you own? The answer for most people ranges from a few changes of clothing to a large house full of possessions – your material self. It turns out that most of us also have a digital self – the information and items we create or that others collect about us. It is your footprint, your impact on the digital world. Without a digital self, you don’t exist in the world of computers and the Internet.
The era of Internet has spawned riotous new forms of business disruption as cheap tools and services combined with Internet reach and social media have empowered anyone on the planet to compete with the largest, most established businesses. James McQuivey’s reports and book on digital disruption highlight the fast rise of new hardware devices such as Microsoft’s Kinect and Apple’s iPad, and the fast mainstreaming of new Internet services such as Dropbox, Twitter, and Facebook. Companies in the business of retail, books, movies, and music have been toppled or transformed, with more to come.
Facebook now has 819 million mobile monthly active users. That’s a huge audience. That’s actually 71% of total active users.
Yesterday, Facebook reported they generated 41% of total ad revenues via mobile. That’s pretty impressive considering they generated nearly 0% end 2011 when they had already 432 million mobile monthly users. Since the launch of mobile ads in 2012, Facebook steadily increased the share of mobile in total ad revenues: it was 23% end 2012 and 30% in Q1 2013.
There is still a monetization gap in comparison to the share of their mobile audience, but that’s definitely impressive for a new product.
There are a couple of reasons for this sharp increase. Time spent on Facebook is meaningful. Facebook’s mobile ads integrate well in the natural flow of Facebook’s news feeds. They are quite visible and are increasingly successful at driving mobile app installs. According to our European Technographics Consumer Technology Online Survey, Q4 2012, 16% of online adult smartphone owners (ages 16-plus) who use apps report that they first learned about an app via social networking websites such as Facebook. No wonder why the likes of Fiksu and other app boosters spent a lot of money on Facebook mobile ads. Cost per click increased despite a lot more clicks and ads shown.
For this approach to be successful in the longer term, there are a couple of key questions to be answered:
Facebook made headlines last Friday with its announcement that it had been the victim of a sophisticated security attack. All major news publications picked up the story, citing widespread concern about the implications of the breach.
The breach itself, however, was largely a nonevent from a security standpoint.
Facebook identified the security breach before it infiltrated too deeply into company systems, remediated all compromised machines, informed law enforcement, and reported the Java exploit to its parent owner Oracle – acting quickly and appropriately. Most importantly, Facebook made it clear that the breach did not expose any of its users’ data.