Facebook mobile advertising will be a game changer

Last month saw social network giant Facebook finally announce its entry into mobile advertising, causing a mixture of intrigue, relief and anger. Intrigue because the last thing the mobile ad industry seems to need is more inventory, relief because according to Facebook’s IPO mobile represents an investment strategy risk, and anger because, well, that’s just the default reaction of most Facebook users to any new feature on the social network.
Facebook’s mobile ads tie into its new Premium ads solution, which allows brands to promote themselves directly in the user’s news feed, as opposed to using traditional ads that display on the right-hand-side of the page. This solves Facebook’s main problem of ads clogging-up real-estate on smaller mobile screens and also gives brands a much more visible and engaging channel.
But will Facebook be able to replicate its online success in the mobile space? It didn’t take long for Zuckerberg and Co to seriously shake-up the traditional online ad space, going from virtually nothing to one of the biggest ad networks on the internet in the space of just a  few years. According to eMarketer, the company is set to grab the largest share of online display market in 2012 for the second year running. So it’s no surprise that the mobile ad industry is watching Facebook very closely.

Will Facebook mobile ads be a game changer?

More inventory
As we mentioned above, the mobile ad industry is facing something of a demand-side crisis. Apps and mobile sites are being pumped out at a tremendous rate, but advertisers are still somewhat coy on mobile spend. So in the short term, Facebook’s entry into the mobile ad world will be sure to drive down prices for advertisers across other mobile ad networks. Hopefully this will provide the impetus for more advertisers to get on-board with mobile, and for other ad networks and mobile ad tech companies to up their game.
Location, Location
Needless to say, Facebook offers an incredible level of demographic targeting when it comes to mobile and this will surely mean that other mobile ad platforms will need to innovate in order to keep up. But Facebook’s most exciting targeting features will revolve around hyper-local ads. Borrell Associates are predicting local mobile ad spend to increase to $3.1 billion in 2013 and it doesn’t take long to imagine the possibilities a platform like Facebook opens-up. Brands could offer incentivised check-ins at local branches (‘check-in with four friends at a local restaurant and get a discount’), send  hyper-local offers once a user checks-in to a shopping centre, and push local traffic to under-performing branches by offering branch-specific deals or coupons. Facebook has the critical mass to make hyper-local mobile promotions work a treat.
In such a fragmented space, Facebook’s mobile eco-system offers an neatly unified solution for advertisers to drive engagement. It has everything from apps to Places, as well as Events, mobile profiles, virtual currency and push notifications. Not to mention the fact that users could seamlessly continue an ad experience from their mobile to their desktop and vice versa, with each experience able to leverage its respective strengths.
The biggest threat to Facebook’s mobile offering in the short term will be user antipathy toward ads in their news feed. But according to some sources, Facebook’s Premium ads are seeing already 5 to 10 times higher click through rate. In the long term, Facebook may find it needs to strike a careful balance when it comes to ads becoming more location-based and integrated with other aspect of the social network. Like Google, it needs to watch the “creepiness level”. But either way, it’s hard to see Facebook’s entry into mobile ads being anything other than a success and indeed a game changer.

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