Money & Business

Facebook Mobile: A Social Network's Big Pivot

By / Jan 31, 2013 (iStockphoto/Thinkstock)

As technology moves, so do revenue streams. How has your business adapted to changing markets?

It’s not new news: The world is going mobile, with more and more people glued to smartphones, tablets, and the like. So how are companies adapting to the changes? And is it working?

Facebook recently reported that its monthly active mobile users jumped 57 percent year-over-year to an impressive 680 million people in the fourth quarter alone, according to CNET. Officially, that means the number of mobile users surpasses the number of desktop users.

“Today, there is no argument: Facebook is a mobile company,” Mark Zuckerberg said on a conference call with analysts.

So how did the company do it? By taking a chance.

The move: Recently, the company introduced mobile ads within the news called “Sponsored Stories,” which has now generated nearly a quarter of the company’s total ad revenue (to the tune of $306 million).

“Facebook expected newsfeed ads to send people fleeing and thought it would need to double-down on ad quality. But that didn’t happen, so the company felt so confident that it upped the number of ads it served,” CNET reports.

The result? A 2 percent decrease in users, which proved that mobile users are OK with the flurry of mobile ads. The status updates run in a user’s regular newsfeed but are sponsored ads from brands and advertisers. The goal is to further target these ads to users—and as it has proven time and time again, user experience is something Facebook knows well.

The risk: But it’s not all good news. The company is now spending faster than it’s making money, with Zuckerberg even telling CNET that he expects Facebook “expenses to grow at a faster rate than we expect to grow our revenue this year, which means that we aren’t operating to maximize our profits this year.”

With big risks come big rewards, to be sure, but it seems that Facebook’s investors are a little shaky on where to put their money. Facebook stock initially fell around 5 percent following its latest earnings report, but rose to 1.5 percent, according to the Wall Street Journal.

How is your association optimizing for mobile? Let us know what you’re trying in the comments.

Chloe Thompson

Chloe Thompson is a contributing writer to Associations Now. More »

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