Getting to grips with mobile interfaces, and serving targeted advertising using them, is key if Facebook is to make nervous shareholders happy. Its latest effort, Facebook Home, is built on top of Google’s Android operating system, a move both fitting and cheeky given Google makes its money in the same way as Facebook does: by selling advertising.
Facebook and Google don’t simply sell space to advertisers, they sell a highly segmented audience for precise targeting. By combining data on usage, location and behaviour, both companies offer advertisers the opportunity to reach a (more) captive audience — and it’s an audience that is increasingly mobile.
Mobile isn’t important to Facebook only because an increasing numbers of users — particularly new ones from emerging markets — are using mobile platforms as their primary method of accessing the social network, but because mobile represents an opportunity to target adverts at users with unprecedented precision.
When it was listed in May 2012, Facebook CEO Mark Zuckerberg spoke about the importance of mobile to the company’s future success. So Thursday’s big keynote was not unexpected.
While many expected a dedicated Facebook-owned mobile phone to be announced this week — it instead chose to work with smartphone maker HTC — the social network showed that its future success doesn’t lie in winning users over with hardware necessarily, but rather about keeping them using its software.
Although HTC has agreed to make a device, the HTC First, which will have the new Facebook Home preinstalled, Facebook’s real hope is that users of Samsung’s Galaxy S3, S4 and Note 2 as well as HTC’s One and One X will voluntarily download Facebook Home and replace their default Android overlays. As it’s designed to be the first port of call for phone users, it’s something of a raised middle finger to Android’s parent, Google.
But the biggest threat to Facebook isn’t necessarily Google or its Google+, the search giant’s answer to Facebook, but rather the slew of mobile apps on the market, some of which replicate aspects of Facebook.
Facebook Messenger, for example, is the social network’s answer to the threat posed by instant messaging services such as iMessage, WhatsApp and WeChat. Like other instant messaging services, Messenger is also destined to eat into mobile operators’ SMS revenue.
Meanwhile, Facebook Camera was the company making sure it remained relevant in the imaging space — not surprising given that sharing images and getting users to engage with them by tagging, liking or commenting on them is another key way in which Facebook lures users back time after time. A big threat in this area was Instagram, so Facebook bought it for an eye-popping US$1bn.
Since listing, Facebook’s share price has fallen by 30%. Investors are concerned about its ability to capitalise on and monetise mobile users. Google provides mobile apps for mapping, cloud storage, e-mail and many other services that are free of any advertising. It makes money from ads alongside searches and through its AdSense service where users embed its ads on their websites. Facebook’s profits from the traditional, desktop-based Web arguably aren’t sufficient to offer it the same luxury. As a consequence, Facebook has to dominate mobile.
Zuckerberg says Facebook Home will be free of ads at launch, but that commercial messages will be embedded at some future date. Given its track record regarding privacy, people may be a little reluctant about letting it have access to the data a mobile phone offers.
Facebook demonstrated in the mid-2000s when it trounced MySpace that just because you’re first to market it doesn’t mean you’ve won. If a rival implements a better idea, people will switch. Move enough of them and their friends will follow.
Facebook’s challenge is going to be getting enough people to use Facebook Home and then finding a way to serve ads on it that doesn’t chase them away again.
- Craig Wilson is deputy editor at TechCentral. Follow him on Twitter