Is mobile advertising Facebook’s Achilles heel?

Illustration: Old Brick Cell Phone  Credit: Claudio Jule

Illustration: Old Brick Cell Phone Credit: Claudio Jule

Comscore released a report this week detailing how the majority of social network interaction is driven by smartphones.  As reports surface about Facebook’s struggles to realize stronger advertising revenue in anticipation of their IPO, this is a shocking revelation and one that raises serious concerns about Facebook’s true value.

The issue isn’t in the aggregate number, which is near a 50 / 50 split mobile to PC.  What is concerning is that the dominant smartphone demographic according to the Pew Institute is 18-49 (though one assumes this trends younger).   Without mobile, the Facebook phenomenon is a completely different creature, and no one can say with certainty what that is.

Yesterday, Facebook submitted an S-1 Filing with the SEC with the following statement: “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.”

A significant majority of Facebook users in the prime advertising demographics are by Facebook’s explicit admission unreachable.  What does it say about the direction of the company when such a huge blind spot is revealed a week before their IPO?  And for businesses advertising with Facebook, does this mean that you haven’t been reaching who you thought you have been reaching with your marketing dollars?

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[TechCrunch] Facebook’s Sixth Amendment to its S-1 Filing to IPO

Jim Dougherty

Jim Dougherty

Writer and chief of miscellany at leaderswest.com
I'm the guy that wrote the article you just read. Sorry for the typos.
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  • http://www.snohomish-homes.com Stacey Mayer

    I’ve heard many people talking about why Facebook may or may not be worth billions; you’re the only one who pinpointed why there are questions about how it will fulfill it’s promise.

    Let me add another factor to think about.

    I used Facebook for a small campaign, and I was thrilled to have 300,000 impressions over just a couple of days, with a wildly successful response. I’m not a newcomer to “sorting” through demographics, and I love to poke through viewer’s stats, so it was easy for me.

    I think it may be awhile before many of America’s small businesses understand what Facebook can do for them. Facebook’s data allows you to almost instantly “tweak” your campaign, to better capture your market, on the fly; hence saving advertising dollars. Since most advertisers still trust the, “place ad, wait six weeks for it to appear, see what happens,” cycle of printed magazines best, I believe the real “earnings curve” of Facebook will follow the user’s “learning curve”, as advertisers learn how to use Facebook to their best advantage.

    As that reaches critical mass, Facebook’s earnings may go nuts.