Facebook Mystery: Search and Mobile Ad Revenue – prime indicators of what’s to follow

Ahead of Facebook's ''Come see what we're building" mystery press conference taking place at its Californian headquarters today, speculation is rife as to exactly what the social network will be unveiling. Among others, rumours range from a Facebook phone, a search engine to rival Google, a new way of inserting ads into its mobile platform, through to getting Facebook embedded in vehicles ahead of other social networks.

According to Andreas Pouros, COO at leading London-based independent digital marketing agency, Greenlight, two things are poignantly clear and are likely to be the key indicators as to what Facebook will be revealing.

"On the advertising front, Facebook is looking to mobile to grow revenues and the challenge of how it monetises people's usage of its network over mobile phones and applications continues to be a primary concern for investors.

Search-wise, CEO of Facebook Mark Zuckerberg has made it clear that Facebook has every intention of giving Google a run for its money by marrying social networking with one of the most valuable areas of the technology industry: Search. In fact, just four months ago at a tech conference in San Francisco, he said the search market represents a "big opportunity" that Facebook is uniquely positioned to address."

Facebook could capture close to 50 per cent of the global Search market

A global survey " Search & Social Survey (2011-2012)", undertaken by the agency concluded Facebook could potentially capture close to a quarter of the Search market were it to launch its own search engine tomorrow, making it the second most utilised search engine in every major market except for China, Japan, and Russia, where it would occupy an uncontested third place. (See Fig 1, below)

According to Greenlight's Pouros, it wouldn't need to be a spectacular engine either, just well integrated into the Facebook experience and generally competent.

What's more, Greenlight's results also suggested Facebook could increase that projected market share to a maximum of 50 per cent within a few years by converting the least overtly loyal Google users over to them. However, Pouros points out that increase would need to come from the 27 per cent of respondents who replied 'Maybe, but only if it was better than Google and Bing'.

(Facebook already integrates Bing into its Search function, but it is a buried option in the navigational side-bar post query, so this really does not constitute its own search engine by any real definition).

Fig 1 - If Facebook incorporated its own search engine, would you use it over your preferred search engine?

Use of Facebook as a search engine

Source: Greenlight

 

No Facebook phone yet, but if there were, a poll by Greenlight shows over 50% could be swayed to switch

Speculating in June 2012 on how successful it might be, Greenlight polled 500 people globally to gauge consumer appetite were Facebook to produce its own mobile phone. 50 per cent said they would 'never' switch to a Facebook phone, 8 per cent said they 'definitely' would, whilst the remaining 44 per cent stated that they would 'maybe' purchase a Facebook phone.

The importance of being mobile

Last July, reports surfaced in the press about Facebook and HTC having brokered a deal to produce a Facebook phone, one which the social network denied over an earnings call, and continues to dismiss.

Pouros commented then that Facebook remains without a solid answer to its mobile problem:

"Yes, new ad formats have been and will continue to be launched by the company for mobile users, but there is a serious question over whether Facebook can integrate a compelling advertising offering on the smallest of screens which users will be comfortable with and that does not interfere with their Facebook user experience. Sponsored Stories, its newest unit is doing well, but many users have grown to dislike it as it consumes more and more of a users' news feed. But in the mobile battle, Google and Apple remain far ahead of the pack."

At the latter end of 2011, Facebook stated that over 425 million monthly active users accessed Facebook on a mobile device, approximately half of all of Facebook's monthly active users. Pouros points out that whilst this has increased Facebook usage, it means users are accessing the social network increasingly on devices which Facebook has less control over, with less opportunity to make money from with advertising, mainly because these devices have less space for advertising, are influenced by third parties (Apple, Android, etc.), and Facebook delivered via apps, like Flipboard, are much harder to infiltrate with advertising.

This is not the case for other companies, such as Google. Its advertising mechanisms fit infinitely more comfortably on a mobile platform.

However, according to Greenlight's Pouros, by finding a solution to the mobile problem, Facebook could make significant inroads in addressing its ad revenue slowdown and help alleviate concerns around future profit growth which have plagued it pretty much from the day it floated.

 

* Search & Social Media Survey (2011-2012) - Greenlight surveyed 500 people - students, law enforcement professionals, medical staff, accountants, lawyers, the unemployed, and everyone in between, to ascertain how they engage with online advertising, search engines, and social networks, in order to glean insight into how consumers engage with marketers today, and formulate views on what the future might hold. Findings from the 2012/2013 research will be released in Q1 2013.

 

Filter posts

Powered by

Back to Top

© Copyright 2014 Greenlight. All Rights Reserved Terms & Conditions