What Do Facebook's Earnings Mean for Marketers?
Published: February 3, 2014
Author: Zach Greenberger
Facebook’s earnings for Q4 2013 blew away analysts’ expectations and skyrocketed the company stock more than 10%. Throughout their conference call, the Facebook executive team focused on mobile usage and mobile ad revenue as key drivers of growth. We can expect to see an array of enhancements to Facebook’s mobile offerings, including several standalone mobile apps, like the forthcoming Paper, that extend the Facebook experience outside their native client. But what does that mean for marketers? How can we transition our strategies to find campaign success in a multi-touch world?
Let’s first look at the numbers from Facebook’s earnings announcement. While overall user growth remains steady at about 5% per quarter, mobile user counts are increasing about 10% per quarter (daily active users). Mobile ad revenue, for the first time, surpassed $1 billion for the quarter and represented almost half of Facebook’s ad revenue. Worldwide, smartphone sales have already surpassed desktop computer sales, and are predicted grow 30% annually over the next five years (according to Alex Cocotas of Business Insider Intelligence). But does increased mobile usage translate to increased revenue for advertisers?
Mobile Browsing, Desktop Buying
ComScore reported that in June of 2013, consumers spent more time shopping retail sites on mobile than they did on desktop. This creates huge potential for converting mobile users into mobile purchasers. This past holiday season, comScore reported again that 18.5% of digital sales were made on mobile devices over the Black Friday/Cyber Monday weekend. While that’s an impressive number, almost double last year, its disparity from the earlier report on mobile commerce activity illustrates how many consumers are browsing and researching on mobile, but buying on desktop.
What to do?
Despite the explosion in Facebook’s mobile ad revenue, mobile ad inventory remains a largely untapped market. Click-through rates are higher, costs-per-click are lower, and mobile-specific ad features provide significant value. The dark lining to this silver cloud is that conversion rates are lower. It’s more difficult to build a great mobile user experience that guides consumers through the purchase process. So how can marketers take advantage of the mobile opportunity?
Determine your mobile goals
As James Scherer wrote, sales are not the only goal for marketers. There are actions leading up to a sale easier to earn than a purchase. Consider pushing users to a mobile site-registration, and then follow-up over email with an automated marketing campaign.
Don’t be afraid to connect
If you have access to a call center, directing users to speak to a representative is a great option. Just make sure you’re attributing telephone sales to your marketing campaign properly, recognizing its full contribution.
Invest in your site
If your purchase process is relatively simple, invest in a responsive mobile site. Focus on the user experience, customizing your checkout flow to highlight your best-selling products or services. Mobile presents design challenges forcing us to simplify our experience. Lessons learned from this can well be applied to the desktop experience.
Embrace the app
If you have an established mobile revenue stream on your web application, consider investing in a native mobile app. Benefits include: persistent presence on the mobile home screen, ability to send notifications, and advanced integration into device hardware. Not every consumer is going to commit to a download, but those who do will purchase more frequently.
But what about Facebook?
These strategies work regardless of your marketing goals, but investing in mobile also puts you in lockstep with Facebook’s game plan. You’ll put your company in a position to benefit from emerging tools by investing in these trends:
Website and Mobile Custom Audience
Mobile App Engagement Ads
A recently introduced and under-utilized ad unit, Facebook’s Mobile App Engagement Ad, lets marketers move beyond the install. By targeting existing users of their applications, advertisers can direct them to deep links within their applications. These ad units optimize towards the performance of specific actions like in-app purchases or credit-card checkouts. This opens Facebook’s mobile News Feed to the same type of direct response e-commerce marketing that’s driving significant return on ad spend on desktop. Combined with Mobile Custom Audiences, advertisers can now target the Lookalikes of mobile purchasers who have not yet purchased to complete transactions on their application.
These are exciting days, as digital communication shifts from desktop to mobile. It’s a risky business to invest in an emerging technology. Looking back just a few years to companies that invested in text-based WAP technology, we can see that moving too soon is a gamble. But Facebook’s rapid transition to a mobile-monetizing business is a strong indicator that the time to invest is now. For every industry operating online, one player will emerge as the dominant force in mobile, and it might not be the desktop industry leader.