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May 16, 2012

53 percent of American cell phone owners have a Smartphone, and since 88 percent of US adults are now cell phone owners, that means nearly half (46%) of all American adults own a Smartphone. One key feature of smartphones is the ability to download applications. Facebook’s popular mobile app is the most active among Smartphone owners 18-24 and 25-34, who both hover at around an 80 percent active reach. Therefore, with stats like this, it should come as no surprise that Facebook’s mobile app has now passed its website in popularity. According to a recent report from Comscore, time spent on Facebook’s mobile site and apps per month (441 minutes) has finally surpassed usage of its classic website (391 minutes) — for Americans who use both Facebook interfaces. However, this presents a big problem for Facebook.

With Facebook’s impending IPO (set for Friday), it seems the forces of the universe are working against Facebook this week. First GM publicly pulls its $10 million Facebook ad campaigns, citing that Facebook ads don’t work. Then, Facebook had to warn potential investors in its IPO that the more people who access it from mobile instead of the web, the worse its business is doing. Thus, accessing Facebook through your Smartphone is bad for business, because Facebook only shows a few ads per day in the mobile newsfeed – as opposed to displaying four to seven ads per page on its website (maybe that’s why people prefer Facebook mobile?). Consequentially, Facebook makes a lot less money when you visit from your phone.

Now there’s 78 million Americans age eighteen and older who use Facebook mobile, and they spend 7.3 hours per month there on average, compared to the total 160 million Americans who use Facebook and spend an average of 6.5 hours on its website per month. That’s a big shift from when the web was king.

Therefore, it doesn’t take a rocket scientist to figure out that, in order to make money (and support their sky-high valuation), Facebook needs to start making – and selling – more mobile ads. However, Mark Zuckerberg didn’t want annoying banners that took up most of your Facebook screen. so Facebook’s solution was mobile Sponsored Stories. These sponsored stories first started showing up in March and, while seeing them occasionally isn’t bad, showing too many could make people angry and less likely to visit.

Now Facebook must walk the tightrope. Inject too many ads in the mobile news feed and people will stop visiting, inject too few and it will lose money. No pressure, there’s just a half a billion mobile users watching. (TechCrunch)


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