Mobile

If you think Facebook will take over mobile, you’re not thinking big enough

Image Credit: Nanigans

Lisa Marino is the CEO of the social gaming company RockYou.

Facebook’s recent move to enable Facebook ads in third party mobile apps has created a lot of excitement among mobile developers — but even more concern among mobile advertisers afraid of going up against the Zuckerberg juggernaut.

They really shouldn’t worry, because ultimately, most of us will benefit from Facebook’s entrance. Instead of worrying, in any case, I think it’s more important to see this move from a farther perspective, represents a sea change far broader than just the future of apps and mobile ads.

If successful, Facebook’s mobile ad platform will herald the end of television as our central advertising platform, while transforming how we largely consume content for years to come. That’s thanks to an unspoken dynamic few people consider when discussing advertising: the number of impressions per user per day in mobile apps (social media, games, etc), which are very high relative to other media content.

I’ll explain what I mean — but first, a little background on Facebook-driven ads from the last few years, which informs my thinking:

Why Facebook mobile will (probably) be good for advertisers

Advertisers worried about Facebook’s move into mobile advertising should remember recent history, when Facebook first got into brand advertising in 2008-2009, and Zynga got into advertising for social games in 2011-2012. In both cases, the pie grew dramatically for the industry as a whole, as these big name players opened up relevant traffic to advertisers. My own firm RockYou was an early seller to brands in social apps before Facebook was a “must buy” stock, and once Facebook became a hot commodity in the Summer of 2009, our brand revenues took off. Should the Facebook mobile platform develop proprietary inventory, such as right-rail ads and the like, the overall mobile advertising market will grow. And as the market grows, we should see it push broader trends:

Facebook will struggle on mobile while mobile thrives overall

As Facebook will likely soon discover, there is a very big difference between advertising within the Facebook ecosystem, versus advertising in the big wide world of online mobile. Given the mobile world is still largely driven by native apps off Facebook, Facebook will be playing in the same CPM game that we all do to compete for impressions. Publishers off Facebook will maximize revenue by dividing these impressions across multiple advertisers, just as we do today.

Facebook could counter this move by claiming exclusive rights to certain in-app real estate on its canvas, similar to what it did for right-rail ads on the web and maximize its revenue. But as I said, the simple presence of Facebook in the mobile space will increase the overall market. This is due to the fact that mobile games and mobile apps in general generate high session rates, compared to other media content.

Couple this to the fact that we live in a world where first impressions per daily average user are critical. As a result, it is very difficult for any one advertiser to drive enough fill rates across all the available inventory through direct relationships alone. We saw this problem with iOS, which is why Apple stopped requiring apps in its store to use the Apple network exclusively.

As mobile advertising thrives, it will dominate advertising overall

With Facebook now focused on a platform with such high session rates, it has the potential to drive a broader shift toward mobile, and it’s this possibility that excites — and concerns me — most. Video ads on mobile show the best results, with the CPMs and user engagement far more valuable than display. (We’re seeing videos within our network drive 10x more video revenue per day than display, just on 10% of the impressions.)

It’s true that mobile video ads are more difficult to deploy than other content, but in the long run, we believe there is more revenue in video than display. This is part of a broader trend around mobile, as content continues to be free and look more like TV.

Unfortunately, it’s still unclear what Facebook plans to do with video ads within its mobile platform. The company has the potential to lead this drive, and in doing so, lead advertising’s move away from TV as the dominant advertising channel. However, as I’ve argued, the mere fact that Facebook is pushing into mobile will push many other players into the space as well.

One of us will get video right, because the opportunity is too great, and the larger social trend into mobile is too powerful to ignore.

Lisa Marino is the CEO of the social gaming company RockYou. Previously Chief Operating Officer, she was instrumental in guiding the company as it dedicated itself to the gaming sector. As Chief Revenue Officer she expanded the company’s media business and in the process made RockYou one of the largest social media advertising networks.

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