When Facebook filed for its IPO last week, CEO Mark Zuckerberg revealed that the company generated $3.7 billion in revenue in 2011, 85 percent of it stemming from advertising.
Currently, Facebook solely hosts ads on the standard version of its social media platform. However, the company recently inked a deal with Bango that will bring ads and mobile payments to Facebook mobile versions beginning in March.
Bango, the mobile apps payment services provider based in the United Kingdom, already has a deal with Research in Motion (manufacturer of the BlackBerry) and Amazon. Facebook officials feel they are missing out on huge revenue opportunities in the $37 billion mobile commerce market, and with Facebook’s plan to go public, Zuckerberg needs to start making decisions that make Facebook attractive to investors. While this entry presents Facebook with promising growth potential, the Facebook community will have resistance to accepting the changes.
There are 425 million Facebook users who access the social media platform on their mobile devices and smartphones. When users begin to feel inundated by ads, especially on mobile platforms, they may begin to lose interest and deviate away from the platform. Even if they do not completely deviate from Facebook, they may cut back on their engagement time if it becomes overrun with advertising. Mobile allows for quick, on-the-go access and this could potentially harm that experience.
Zuckerberg is in a tough place now that he has to appeal to shareholders. As CEO, there are strategic business opportunities that his company can capitalize on (mobile advertising and payments); however, the Facebook community may not be the appropriate audience to accept this. It seems Facebook has rushed into this decision and attempted to “fit-it-in” sometime between its IPO filing and its public offering date.
This is not to say that mobile advertising and payments cannot work on Facebook, but the move does leave the company open to potential backlash from its users. Twitter, for example, took an extended amount of time before introducing its Promoted products, which were applauded by its users as non-intrusive and well-designed.
The Facebook community has not been an audience that accepts change well. When Facebook introduced changes in the display layout in the fall, users were confused and took a while to accept the change. Privacy concerns on Facebook remain a constant issue and can have an even greater impact on consumers feeling overwhelmed when they begin seeing targeted ads show up on their smartphones and mobile devices beginning in March.
Kenneth C. Wisnefski is founder and chief executive of WebiMax , an online marketing firm in Mount Laurel, N.J., specializing in search engine optimization, search engine marketing, pay per click management and social media marketing.