PROBLEM: Facebook Has 400 Million Mobile Users and It's Not Making a Dime from Them

Posted by Knowlton Thomas

So Facebook has filed for its IPO, tons of people are going to get crazy rich, blah blah blah. But not everything is sugar and spice on the Facebook front: it needs to fix its mobile problem, and fast.

Most companies have a mobile problem: not getting enough active users. This isn't Facebook's problem. Mark Zuckerberg's social network has tons of them—well over 400 million, in fact. The problem is that these mobile users don't deliver a dime to Facebook, and may actually be harming the company's balance sheet by eroding web traffic, where monetization is well established.

In the company's initial public offer filing with the Securities and Exchange Commission, Facebook acknowledged that "growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results." This is significant. Mobile is the future, as dozens of studies have confirmed. And yet, mobile is damaging Facebook's business model.

But it's not only that—Facebook is actually encouraging its users to go mobile: the company says in the same filing that it is focusing "on developing mobile products to encourage mobile usage of Facebook," even though "we do not currently directly generate any meaningful revenue from the use of Facebook mobile products." What the…?

Of course, Facebook has every intention of monetizing mobile users. Right now, it's best idea is Sponsored Stories, which are text-based ads that appear would inside news feeds and under friends' statuses when brands are mentioned. Users have flamed the idea, but guess what? 425 million people not generating revenue for a $100-billion company doesn't quite work.

A lot of Facebook's public market success is going to depend on convincing investors that its mobile success can be monetized. Big time.

Company:
Facebook
Website:
http://www.facebook.com
Location:
Toronto, Ontario, Canada

Facebook's mission is to give people the power to share and make the world more open and connected. Millions of people use Facebook everyday to keep up with friends, upload an unlimited number of photos, share links and videos, and learn more about the people they meet. more


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Knowlton Thomas

Knowlton Thomas

Knowlton is the managing editor of Techvibes. Based in Vancouver, Knowlton has been published in national publications and has also appeared on television and radio. Previously he was an editor for New Westminster weekly The Other Press and served on its board of directors. When not working, Knowlton enjoys playing tennis or otherwise enjoying the outdoors. more



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