So here’s the mother of all IPOs then, and it was coming a long way. The web was buzzing, today analysts of any couleur are commenting and reading through the fine print of Facebook’s registration statement (known as the S-1) in order to find valuable nuggets of information that they had not had before and myriads of bloggers and journalists drool over the new wave of young wealthy people in the Valley.
No mobile revenue
Whilst I’d love to join into this frenzy, I want to focus on one point in the S-1 that caught my eye, and which might pose some interesting challenges for the social networking giant going forward, namely the large abyss between mobile use of the site and revenues derived from it. You will likely have read about the huge amount of Facebook users regularly using the site from mobile devices. According to the company itself, 425m active users (out of a user base of 845m) accessed the site using mobile devices; that’s more than 50%. And yet, Facebook does not derive “any meaningful revenue” (quote from their S-1) from it.
Why (these) ads don’t work as well
This is, of course, because it – thus far – did not find a good way to display ads in their various guises to mobile users. The screen real estate is scarce and it would be easy to destroy the user experience by doing so. However, with that growth in usage, they may have to review this approach. The challenge is then to successfully marry user experience on a small(er) screen with revenue-generating activities. And, alas, the latter are so far mainly display ads of various sorts. How successful will those be? My guess is not very much. It is likely one reason why Facebook so far has shied away from using them: it might just destroy the user experience to an extent that its users would be seriously upset.
And yet, it is only the latest case of highlighting one of the common fallacies of migration from web to mobile (and I am not even saying they are wrong to move that way; their user growth and occuption of that space will likely counter-balance that; I think it was Accel’s Rich Wong who said that it is easier to find revenue streams once you have 100′s of millions of users than to find 100′s of millions of users with a (pre-)defined revenue stream). Nevertheless, none of us would watch a TV commercial showing you a static picture and someone reading something out from the off (this is exactly how TV advertising kicked off). We were not overly thrilled by early attempts of online advertising; they were merely an attempt to convert billboards and printed circulars to the digital realm. It was not until Google’s AdWords that online advertising really hit it off. So why would we now be content with a mere port from another form of media?
The Japanese way?
Japan has shown that there are other ways. Japan’s GREE reportedly records similar revenues from about 5% the user base than Facebook does. It does so mainly with virtual currencies and goods (and, yes, it has moved to a slightly different target market); users can customize their experiences within that social network by buying “stuff” to embellish their avatars, play, use, customize content, etc. Japan has always been something of the Galapagos Islands when it comes to mobile usage: what worked there didn’t often work elsewhere (anyone remember i-mode?). However, we are seeing a similar effect on smartphone applications: 65% of the top-grossing apps these days use some sort of “freemium” feature. This approach might be too late for Facebook now though. Its users would be up in arms would they start charging for features that users have come to see as free.
I am fairly confident that the good folks of Facebook are here to stay but I am still thrilled to see if, when and how they will begin to adapt. With all the very smart people in the company, we may just see the next wave of mobile monetization, and I wonder what it might be…
If you are in the North-West of England and have nothing to do or, rather, nothing really, really important to do, you may want to drop in for our latest Mobile Monday Manchester edition, which takes place tonight starting at 6pm at the BBC in the brand-spanking new MediaCityUK.
The topic of the night will be “Second Screen” and we will have people from all corners of that: speakers from the Beep itself, companies providing infrastructure and service as well as creative agencies that deliver on these screens.
More info here. To join us, please sign up here (there is only standing room left though…).
Only two weeks or so, and we’ll be off. One of the most exciting (well, correct that: the most exciting) mobile events of the year will kick off, namely MLOVE. Hosted in a proper medieval German castle, it boasts an incredible line-up of holistic mobile thinkers and tinkerers and all the ingredients to “change your life” (quote some of the participants of previous iterations!).
So here’s the speaker line-up:
- Grammy-winning musician and multi-platform entrepreneur Chamillionaire;
- Yuri van Geest, the man behind Trend8;
- Thomas Goetz, Executive Editor of Wired (!);
- Russell Buckley, employee #1 at AdMob (and a ton of other things!);
- Kei Shimada, one of Japan’s premier wireless ambassadors;
- Jason Collins, Alcatel-Lucent’s VP of Emerging Technology and Innovation (and one of those awesome uber-smart people);
- Daniel Graf of Google’s Mobile Apps Labs fame;
- Jean Schmitt, one of France’s smartest investors (and with JolTech and powerhouse Sofinnova);
- Rovio’s Mighty Eagle, Peter Vesterbacka (how angry can your bird get?);
- Thorsten Dirks, CEO of E-Plus
- Beverly Jackson, the Director Marketing & Social Media of the Grammy Awards;
- plus leaders from Volkswagen, OgilvyOne, leaders in education, philosphers, bloggers, the CEO of Butterfly Corp, Dentsu (Japan’s #1 ad agency), Contagious and the indomitable Corvida Raven (of SheGeeks) and Jonathan MacDonald (of This Fluid World), composers, DJs, and, last but not least Adele Waugaman, the UN Foundation’s Sr. Director for their Technology Partnership.
We will also run a Teen Camp for the generation that really matters, which is run in conjunction with the Hasso Plattner (he of SAP fame) Institute, which I have the great honour to co-curate together with 16-year-old Tony Neidhardt (who – despite her tender age – is already a veteran in the scene!) and Jane Mason.
In one (well, few) word(s): it will be absolutely awesome!
If you feel inclined to join (and you really, really, really should!!!), check in here.
This week, I was fortunate enough to be given the opportunity to speak to the Android developer community at the fabulous Droidcon London.
The following are the slides to my talk on “Making Money on Android” in which I focus on the necessity to tackle the challenge to engage users at a time and in a place that a developer can actually control, namely in the game or app itself. Scoreloop provides cool tools for this, and its virtual currency and virtual goods solutions allow developers then to capitalise on that.
Next week, on 15 October 2010, there will be the fantastic opportunity to bask in the glory of Oxford University and attend what many say is one of THE outstanding conferences in the mobile space, namely the University of Oxford’s Mobile Apps and Technologies Conference 2010.
I will be speaking as will James Elles, MEP and folks from Vodafone, IBM, Edelman and many more, including some of the most eminent analysts and strategists of the mobile space. The conference prides itself that it does not deliver any sales pitches, and it is not even very expensive!
So come along and join us for a great day of learning, discussing and networking.
This should have come a week earlier but, alas, I was on the road – quite literally – en route to San Diego and Qualcomm’s most excellent Uplinq conference.
Life of course did not stop, and amongst the things you should not miss was (and is!) the last iteration of the formidable Carnival of the Mobilists, hosted by our very own Peggy Anne Salz on her award-winning MSearchGroove blog. Amongst the gems not to be missed were:
- An interview of a company focused on Windows Phone 7 (yes, you read that right!);
- Tomi Ahonen with another go at the app economy (which he claims isn’t much of an economy; read my comments on this here);
- A look on web bookmarks as an alternative to apps (to which I still not agree; cf. here);
- A couple of posts on Android, and specifically Motorola’s Droid X (and the future, if any, of Motoblur);
- And many, many more…
Finally, my post on Vodafone’s pondered changes to its revenue share structures featured, too.
The carnival is here, and well worth a read! And, again, my apologies for the late posting of this. But the old Highway 101 along the Pacific just had me in its grips… 
