Who Is Going To Monetize Mobile Traffic?

Use of mobile devices is popular and it’s on the rise. More people are using their smartphones and iPads to access the web- Facebook SEC filing revealed a loophole in advertising that can significantly boost revenue for Facebook and other companies where mobile traffic continues to surge.

More than half of Facebook’s 800 million-plus users log in through their mobile devices, that is a lot of ad impression but no significant money is being generated from these users.

“We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven,”revealed Facebook in the SEC filing’s risk assessment.

Facebook have this challenge ahead of them, either they take it on and solve it- or someone else does- most likely an ad technology company. Whoever provides the technology to effectively tackle the mobile monetization problem is going to be a tech superstar.

Facebook are the most likely candidates to solve this problem but other companies like Google will want to do the same thing. One of their biggest properties, Youtube- also have a problem monetising traffic from mobile devices and they have also proving popular according to data compiled by some Youtube partners. ‘sxephil‘, a popular news and commentary Youtuber revealed that a large portion of his traffic comes from mobile devices and he doesn’t make any money from this traffic.

So Google may well be the company to bring effective monetization strategies to mobile.

Both Facebook and Google heavily rely on advertising as their main source of income and both of these companies have a challenge ahead of them to gain revenue from mobile devices.

It’s not that Ads don’t exist on mobile devices- a popular one is Admob- which is used on several apps- they just don’t produce significant revenue because user’s don’t like the ads on mobile devices and this produces low CTR and even lower CPC.

Google was the biggest money maker on mobile devices last year with only $750 million in revenue according to eMarketer data. For a company that makes about $40 billion mostly from advertising, $750 million is meager.

Apple made about $90 million in 2011 from mobile says eMarketer

The same goes with popular apps their revenue comes from sales of their product rather than advertising.

The real issue is innovation in the mobile advertising space, so it can compete with the revenue numbers online, print and TV advertising is bringing in.

Another possible reason for the lack of interaction with mobile ads are the users. People are using mobile devices for the quick status updates and picture uploads, where as with the computer, user’s are more likely to use the chat function, play games and read and interact with wall post. This leaves more opportunity for the user to also interact with ads on the site.

Because of the small size of mobile devices it is unlikely that the advertising figures will match that of online and print. Tablet computing can possible see better figures with advertising due to the bigger size.

Mobile advertising needs innovation and a completely different strategy, rather than following the suit of the online space and print.

One possible method of advertising where mobile devices could strive is the use of ‘check ins’- check-ins are much more popular on mobile devices when people want to find the closest restaurants, shops etc. Services such as highlighted check ins or promotional check-ins can bring in a lot of revenue for companies such as Facebook, Google and Foursqaure.

Location based ads could be the future of mobile advertising.

Facebook can also revive it’s Groupon competitor which was killed off after 4 months. Or they can make a deal with Groupon or Livingsocial to monetize it’s mobile users by displaying deals and taking a cut for each deal purchased.




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