Is Facebook Close To Cracking Mobile Monetization Puzzle With Location Based Ads?
Notwithstanding the IPO debacle, Facebook (NASDAQ:FB) seems to be focused on cracking the mobile monetization puzzle, which was one of the primary concerns of the investors and possibly the main reason why it crashed following its public debut. It is apparently working on a new location-based mobile advertising product which would allow advertisers to target users based on their real-time location data and check-ins. [1]
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It could target not only more relevant ads, but also offers and deals based on a user’s location, and generate a significant amount of revenue in the coming years. Such a service would compete with Foursquare, Yelp (NYSE:YELP) and Google which are all trying to capture market share in the SoLoMo (social-local-mobile) advertising space. Facebook is one of the companies which is best equipped to leverage its massive user base and roll out such a service for advertisers. Its recent mobile/local startup acquisitions like Gowalla might give it a better shot at taking on this market.
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Facebook recently rolled out new mobile ad products, enabling marketers to buy sponsored stories in the News Feed on Mobile separately, without buying ads for News Feed on Desktop, which might help it attract advertisers looking to specifically target mobile users.
It is also planning to launch a social advertising exchange for its ad platform which will enable advertisers to bid on ads in real-time.
Since social advertising is Facebook’s lifeblood, we expect its focus on increasing social ad revenue to pay off in the coming years. Mobile is going to account for a significant portion of its overall ad revenue going forward.
We currently have a $33 Trefis price estimate for Facebook, which stands just above its market price. It competes primarily with Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT) and Yahoo (NYSE:YHOO) in the online advertising space.
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Notes:- Facebook Working On Location-Based Mobile-Ad Product, Bloomberg [↩]