By James Sherrett No Responses »

Facebook IPO: the Mobile Story revealed in S-1 Filing

Feb 022012

Since the Facebook IPO is all over the news we thought we’d examine the facet of the story that interests us the most – the mobile story and what was revealed in their S-1 filing.

Background and Context

A few months ago we looked at a snapshot of Facebook’s sharing data on mobile and found that 57% of all sharing was through the mobile web, with all apps on all platforms combined – iPhone, Android and Blackberry – contributing 40%.

(Click for full size image.)

Combine that data snapshot with ongoing rumors of a full HTML-5 version of Facebook, fit for the mobile web and codenamed Project Spartan, and we can start to see the macro trend of Facebook’s business and users is to embrace the mobile web as essential.

Mobile Summary of S-1 Filing

In Facebook’s S-1 Filing, we saw more details on mobile usage, growth and revenues that caught our eyes.

(The S-1 is form companies use to describe their business when they go public. Here’s more background on S-1 filings.)

And a few of the mobile details that stood out in the coverage:

  • Facebook reports 845 million Monthly Active Users (MAUs)
  • 57% of monthly active users visit Facebook every day and are classified as Daily Active Users (DAUs)
  • 425 million of those monthly active users (~50%) used Facebook mobile products in December, 2011
  • Facebook does not serve advertising on its mobile experience so increased mobile usage actually hurts their revenues
  • Facebook are nervous about mobile because “user growth and engagement on mobile devices depend upon effective operation with mobile operating systems, networks, and standards that we do not control”

As covered by ReadWriteWeb in Facebook’s Biggest Risks Explained, quoting Antone Johnson in point form:

“No revenue currently generated from mobile advertising; unclear how much mobile use could be monetized; failure to solve this puzzle combined with a dramatic shift toward mobile usage could be a serious problem for FB; and per the next risk factor, they don’t control the iOS and Android platforms.”

So mobile presents a paradox for Facebook: huge growth, no current revenues.

Mobile is how their users are increasingly choosing to access Facebook but they haven’t figured out how to insert their key revenue driver – advertising – into the experience.

Mobile: Engine of International Growth

Reading the Facebook S-1 and knowing a lot about international mobile traffic, we can see that a heavyweight driver of Facebook growth around the world is the mobile web.

From the Facebook S-1:

There are more than two billion global Internet users, according to an industry source, and we aim to connect all of them. We have achieved varying levels of penetration within the population of Internet users in different countries. For example, in countries such as Chile, Turkey, and Venezuela we estimate that we have penetration rates of greater than 80% of Internet users; in countries such as the United Kingdom and the United States we estimate that we have penetration rates of approximately 60%; Increased mobile usage was a key contributor to this growth. DAUs as a percentage of MAUs increased from 54% in December 2010 to 57% in December 2011.

And as move towards 2014, the year when mobile becomes the #1 way to access the web, mobile will increase its importance as the engine for international growth of online businesses.

Reading into the numbers, it’s apparent that Facebook see the popularity of the mobile web today and also a dominant future for the mobile web around the globe.

So it will be interesting to watch their evolution as a public company, as they are required to share more information publicly.

If early indications are accurate, mobile apps will be part to their mobile strategy and the mobile web will be essential.

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By James Sherrett 2 Responses »

Mobile Stats: 57% of Mobile Posting on Facebook from Mobile Web

Sep 302011

One of the discussions we often get invited to contribute to with clients is a discussion on their mobile strategy.

What’s the right thing for them to do: mobile apps or mobile web?

Each client has their own situation, customer needs, goals and context. A blog post won’t do justice to answering the full question.

But this blog post seeks to provide some data on how people use the largest website in the world with their mobile devices.

Using data gathered by Dan Zarrella in his strong post New Data: 33% of Facebook Posting is Mobile, we broke down the 33% of mobile traffic posting to Facebook a little further to see how they were accessing Facebook.

(Click for full size image.)

According to the 70,000 samples Dan gathered, mobile web contributes 57% of the mobile posts to Facebook. All apps combined contribute 43%.

So when we hear rumors of Facebook’s Project Spartan now we can start to see the reasoning behind the investment and direction towards a full HTML 5 version of Facebook.

Reading into the numbers, I think we can guess that Facebook see mobile web’s popularity today and they also see a dominant future for the mobile web.

So while apps are part to their mobile strategy, the mobile web is essential.

(Thanks to Darren Barefoot for the coffee and conversation that spurred this post.)

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By Igor Faletski No Responses »

Mobile Web Is Not (Yet) Ready For Business Model Innovation

Dec 262010

Here’s Andrew Mason, CEO of Groupon:

I think that we’ll continue to see more companies <…> who put us [Groupon] to shame a couple years from now with their rate of growth.

According to Andrew, Groupon grew so quickly thanks to its social features. What’s going to drive web hyper-growth in 2012? The mobile web – but it’s not ready yet.

Consider Instagr.am, the darling of early adopters this winter. It’s up to a million users, growing through Twitter and app downloads – which is awesome. However, many are lost at every stage of the acquisition funnel – clicking the AppStore link, installing, learning the native UI. What if you could start taking photos & applying filters via the mobile browser – right after clicking that very first instagr.am link? They’d probably be at 5-10 million users by now. Today, the Instagr.am website isn’t even mobile-friendly.

Universal JavaScript APIs for mobile cameras are on their way (you can use PhoneGap in the meantime) – but not today, limiting growth opportunities for mobile-centric web services.

Another good example is online advertising (search or display), where every mobile click leading to a desktop page will convert at a disastrously low rate. This inhibits a lot of mobile innovation in pay-for-performance advertising – especially in e-commerce.

Mobile web has to get more mobile in order to facilitate business models of tomorrow. Let’s do our part to make it happen!

By Igor Faletski No Responses »

Mobile Commerce - not iAds - Will Drive Growth in Mobile Advertising

Dec 192010

Mobile commerce sales more than doubled this year, writes Bill Siwicki of Internet Retailer. Reaching 3.4 billion dollars by the end of 2010, it’s already bigger than mobile advertising, estimated to be less than a billion dollars per year.

This is great for online retailers and also means that we’re about to see a major shift in the way ad dollars on mobile are spent. There’s a good chance that pay-for-performance ads, placed by online and brick-and-mortar retailers, will dominate mobile ad spending in a few years’ time.

The beauty of e-commerce is in direct measurability of how advertising and marketing perform. As online retailers go mobile, enabling new revenue streams, they’ll have a strong incentive to figure out the best performing mobile marketing channel (whether it’s mobile SEM, display or retargeting) and spend as much as possible on customer acquisition. Their competitors will follow, driving demand for mobile inventory in a way that expensive branded iAd campaigns can’t.

Then there is the local aspect. In his interview on Charlie Rose’s show, Groupon’s Andrew Mason talked about his vision of “the holy grail of local” – bringing pay-for-performance online advertising to millions of boutique businesses around the globe. Today’s Groupon is doing just that, but in a very desktop-centric way with insufficient targeting (most of the business I get Groupons for in Vancouver are simply too far away). Not too long from now, Groupon and its clones will get into a bidding on war for highly targeted mobile inventory on behalf of their client SMEs. This will bring yet another monetization opportunity for developers & publishers.

The future is bright for mobile advertising and commerce as the market grows rapidly while geting more tech-savvy. Without a doubt, 2011 will be the most exciting year yet!

By Igor Faletski 2 Responses »

Organic Search as a Mobile Commerce Driver

May 162010

Mobile marketing has always been a wild mix of technologies – from SMS, MMS and Bluetooth to branded iPhone apps. Choosing a tactic is often done based on a hunch, rather than hard data; ROI discussions are frequently limited to “X AppStore downloads” or “Y messages sent”. But, in a market where “brand awareness” is one of the major objectives, this seems to work year after year.

Enter mobile commerce, where metrics play a far greater role. The space is heating up – there is a lot of creative experiments going on (look at the variety of commerce-enabled iPad apps in the Nielsen usability study alone!). Consumers are getting more comfortable with buying from a mobile device (thanks to the many appstores), which was confirmed by Google reps at the recent EMetrics. Mobile checkouts themselves are more vibrant and faster than ever before. Suddenly there is a lot of very different technologies competing for the m-commerce crown.

First of all, there are iPhone/iPad apps that have purchasing functionality integrated through an advanced API – Gilt and Amazon are good examples of that. The buying process is smooth but native UI implementation is quite expensive and faces fragmentation issues just like other apps. Existing e-commerce platforms like Magento are adding mobile themes & plugins to their default packages. Mobile adaptation platforms like those of UsableNet, Digby or our own Mobify Enterprise take an existing checkout flow mobile; mobile-only commerce solutions are also starting to appear. As an online retailer, what should you pick?

The answer is in the ROI. Online retailers report that conversion rates for mobile users using web checkouts are 70-80% lower than on desktop. Mobile users are already arriving in droves – through organic and paid search, affiliate marketing portals, email newsletters and so forth. Making existing online stores mobile-friendly (without breaking the URLs) is the easiest way to enter the mobile space – with an ROI that’s guaranteed to increase over time. 300-500% conversion lift on mobile is there for anybody willing to invest in optimizing their web checkout for a small screen.

Whether it’s a mobile stylesheet, Magento or Mobify, mobile web remains the logical first step to a complete mobile commerce strategy.