Facebook And Mobile Advertising
Facebook And Mobile Advertising
Consumers are now turning to their cellphones to purchase products, often on a whim – and the data highlights this as this year, mobile advertising revenue was 76% of total advertising revenue, up from 72% last year. The shift to mobile advertising, sparked by a migration to smartphones over laptops, is growing as companies realize this is the fastest way to target consumers. Mobile advertising has also been influenced by brands who are demanding more mobile space as they move to more of an e-commerce model.
Facebook has taken several steps to become the leader in the mobile advertising trend. This movement has influenced several areas including e-commerce, mobile payments, and even an advertiser switch from traditional TV to social media.
Recent earnings revealed Facebook’s growth as it moves towards a $300 billion valuation. Its success in mobile advertising can largely be attributed to its mobile Facebook and Facebook Messenger apps, which are also the top two mobile apps in the U.S.
Since Facebook is well aware of its own popularity, it has taken advantage of its capability to reach a large audience. Facebook’s new advertising capabilities are positioned well, at a time when people are cutting the cord and moving away from cable TV, causing advertisers to switch gears. As a result of cord cutting, advertisers are looking for new spaces to invest their time, and as a result have turned to mobile, a space which they are guaranteed to profit from. Brands are looking to expand their services onto the internet. Facebook recently tested a “buy button” and is also testing a “shop” section on its mobile app, as an addition to its Newsfeed, Pages, and Groups sections. This new e-commerce trend’s goal is to increase customer engagement and increase profits.
As a result of increased demand in the mobile advertising space, Facebook has also revamped its advertising techniques. For example, it is now focusing on video advertising. Over this past year, Facebook’s video views surged from 1 billion to 8 billion, once again underscoring the trend of increased video usage on mobile by consumers. One important effort by Facebook is the introduction of advertising, and e-commerce, to Instagram. Facebook is also putting a lot of effort into staying up to date with new advertising formats. For example, the website has introduced new types of advertising formats such as carousel ads, app install ads and ‘Sign Up’ or ‘Shop Now’ ads.
This mobile push has also led to the development of a news app, known as Notify, which was introduced recently. This app delivers notifications you are interested in directly to your lock screen.
Facebook is constantly thinking of new ways to attract more users to its website, allowing it to stay on top, and as Facebook vamps up its mobile advertising services, will mobile advertising affect Facebook’s earnings? Will the shift to mobile advertising continue to affect the pay-TV industry?
Ideal Asset Management’s Take:
Facebook is constantly looking for new ways to increase engagement on its platforms. Since cluttering the News Feed could take away from user experience, Facebook can show more ads to users if they spend more time on the platform, while keeping the percentage of ads in users’ newsfeeds low. Another way to boost profits is to improve the type of ads to more lucrative formats such as video ads, which command higher prices than other ad formats. Facebook is executing very well in these initiatives. Overall, engagement continues to increase on the Facebook platform, and the increase in video consumption has the potential to shift advertiser dollars to Facebook from television over the long term. Facebook will continue looking for new ways to improve engagement, which not only provides new and interesting ways for users to connect and share on Facebook, but increases profits as well.
All of the ideas expressed in this article are the opinion of Ideal Asset Management LLC
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