According to Facebook’s S-1, Facebook’s “mobile interfaces gained 12 million monthly active users just since March when Facebook listed 488 million monthly users of its mobile products, and now has over 500 million.” Facebook has experienced significant mobile growth in past five years, yet ironically the social networking giant has not launched a mobile advertising product until recently.
It’s important to note that for years Facebook has resisted the temptation of deploying disruptive mobile banner ads. Mobile banner ads would clutter a smallish mobile screen, compromising the user experience. Instead, Facebook has focused on enhancing the mobile user experience and building up their user base.
As Kleiner Perkins partner Mary Meeker highlighted recently, “there’s a major mobile monetization gap, with eCPMs five times lower on mobile than on the desktop Internet.” This means that mobile users rarely engage with mobile banner ads. On a small screen real estate is precious and banner ads can be obnoxious. Apple products don’t fail often, but the iAd mobile product was a humongous flop, mostly because brands were not seeing the ROI in the disruptive ad format.
Facebook’s mobile playbook
Facebook’s next move, as made clear by Sheryl Sandberg, is to take the sponsored story product ad unit to the mobile newsfeed. “Sponsored stories are the cornerstone of the company’s mobile monetization strategy. We avoid the dilemma of where to put ads on the smallish screen. With newsfeed, marketing is incorporated seamlessly into the user experience on mobile devices.”
Besides avoiding the clutter issue, the main reason mobile sponsored stories outshine banner ads is simple: Relevance. Newsfeed ads are from a brand that a user has liked or from a brand that the user’s friend likes. The simple association the user has with the brand (or their friend has with the brand) makes the ad more applicable.
Secondly, sponsored stories are based on page post content, which means they aren’t ads at all, they are brand stories. As per the Lonelybrand blog, “Page Post Ads are exactly what they sound like – ads generated directly from posts on your Page’s wall posts. It’s an excellent way to promote organic content to a much larger audience. Plus, you can build ads from a variety of organic formats including videos, photos, regular status updates, polls, links and events.”
Facebook has been experimenting with a variety of ad formats. One variety is the “Pages you may like” format, which is similar to Facebook’s latest mobile ad unit that focuses driving adoption of mobile apps, for example “Try these games.” Another is the brand’s profile picture tucked under a friend’s profile picture with a “Like Page” call to action. The dust has yet to settle on the exact look and feel of mobile sponsored stories, but either way it’s clear that Facebook’s long awaited mobile advertising strategy has arrived.