Facebook has been in the news a lot recently. The company announced plans on 1st February for an IPO that values it at between $75 billion and $100 billion. This seems like a crazy price until it is noted that the social network is closing in on one billion users – that’s almost 15% of the entire world’s population.
Last year Facebook generated $3.7 billion in revenue and $1 billion in net profits. This makes the price tag look expensive but not as wildly as at first glance. Other technology companies are also very highly valued - Google’s market capitalisation is $190 billion, Microsoft’s $250 billion and Apple’s $425 billion.
To please investors going forward, the company must solve the mobile conundrum. Mobile is hugely important to the business. According to recent figures just over half of the company’s monthly active users are mobile.
Nearly all of Facebook’s revenue comes from advertising; virtually none of those ads are served to mobile users, either in Facebook apps or on the company’s mobile web site.
In addition the parts of the world where Facebook is still growing in total users (for example high population areas such as Brazil and India) are adopting mobile computers faster than they’ve adopted PCs.
However, the smaller space on a mobile screen and the relationship people have with their Facebook friends has meant that advertising in this space poses problems. How best to provide the undoubted reach that Facebook can offer without intruding on a space that has been ad free? How can marketeers harness the data that Facebook has on its members, without stoking existing fears around online privacy?
To try to answer some of these questions, Facebook has started discussing plans about introducing "featured stories" ads, based on the sponsored story format, into users' timelines on mobile devices from March. Earlier this year Facebook had paved the way for mobile advertising, by rolling out "featured stories" within users' news feeds for the first time.
Featured stories are perfectly tailored for display in mobile apps or browsers; no intrusive pop-ups, no annoying video, — just updates given premium space inside a user’s feed for a price. This is very similar to the Twitter’s advertising model with promoted tweets on its site and in its mobile and desktop apps.
Given the volume of user data Facebook hold, these ads have the potential to be more personalised and better targeted than any other mobile ad platform we’ve seen to date.
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