Since its conception, Facebook has been focusing on growing and building the foundations of its platform — News Feeds, location check in, Skype calling and the latest Open Graph. Simultaneously Facebook has also been finding ways to monetize from its current global user base. It was no surprise that in 2012 when Facebook went public they become more serious about monetization.
News Feed/Mobile Ads
Facebook is earning almost $4 million a day from its News Feed ads, in which three-fourths of that come directly from their mobile feed. Advertisers are pleased by these figures and continue to expect, higher click through rates and lower costs per click in this ad format.
Facebook introduced its Facebook Exchange, a real-time bidding (RTB) platform that allows third-party platforms to place retargeting ads on their own network after users have visited external websites marked with DSP cookies.
It allows U.S. users to buy physical and digital goods for their friends. As the recipient has already registered their mailing information under their user profiles, the sender doesn’t need to know the friend’s address. Companies like Starbucks, Apple, Gap, Brookstone, Mondavi Wines and Fab.com are already selling items through this channel.
Facebook began offering large premium ads that get displayed as soon as the user logs out of the desktop web browser page. These ads still can only be purchased directly by Facebook and they come with a price tag equivalent to takeovers on sites like YouTube or Yahoo.
Similarly, Facebook has adopted many monetization schemes to promote brands products & services in recent times. Although it is a heaven for advertisers as they have psychographic & demographic information on their targeted audience to post their ads, but as a Facebook user it certainly looks clumsy and can be very annoying at times. In addition to that Facebook continually fiddles with its privacy policies that can be considered sneaky at times.
Last week, Facebook’s popular photo-sharing app Instagram introduced video recording capability to it. Much like its competitor Vine, which is owned by Twitter, Instagram now lets you record and share short videos using a few taps on your mobile device. This is clearly another step from Facebook to make more inroads in monetization and driving more people to their website.
During the launch, Instagram co-founder Kevin Systrom said that the video feature was initially left out of Instagram because the “speed, simplicity and beauty” the creators strived for in the app “were definitely possible with photos — but it was really hard for video.”
When Facebook focused on advertising & monetization, what was seen as a social media hotspot became tainted in the minds of its users. Older generation people value online privacy and even younger generations are learning to abide themselves in term of privacy that can get skeptical in such an enormous user database.
According to David Ebersman, CFO of Facebook –
Ad impressions continued the recent trend of growing more slowly than users as more of our usage is on mobile devices. This trend is particularly true in markets such as the U.S., where smartphone use is expanding rapidly. The overall number of ads delivered in the U.S. this quarter decreased 2% year-over-year despite a 10% increase in daily users and despite the increase in ads per page from the product changes I mentioned earlier, as daily Web users in the U.S. declined in favor of mobile users. And we're seeing similar trends in other developed markets.
“The 9% increase in price per ad [global] was driven primarily by the United States, where CPMs [price per thousand ads] increased by over 20% due in large part to the ramp-up of Sponsored Stories in News Feed on both PCs and mobile devices.”
Facebook will continue to get a pricing boost as it rolls out more "Sponsored Stories," if user growth flattens or declines, the impact these increases have on Facebook's revenue growth will be limited.
Facebook continues to increase feed-based ad inventory, most recently allowing non-social page Like ads on its mobile site. Although ads haven’t had a significant effect on engagement thus far, the social network must consider qualitative feedback as well to keep a pulse on users’ perception and enjoyment of Facebook as it becomes more commercial. Policy changes like the one preventing ads from including more than 20 percent text are efforts to make advertising blend in with organic content on Facebook and feel less obtrusive to users.
Certainly, there will be further advancement in the monetization scheme from Facebook & we wish it will pay off well for the advertiser and Facebook. But, what will happen to those who joined facebook to meet their friends and have an online connection not to see pop-ups and Ads for something which they can get on eBay or Amazon.