(Every Tuesday, Kyle St. Romain will talk about the business and legal side of the app world. While his opinions don’t always reflect those of Rocksauce Studios, you should hear him out…the guy knows his stuff!)
On Monday, June 18 Sarah Frier, a writer for Bloomberg, reported that Facebook is working on location based mobile advertising; a technology that will allow local businesses to target customers who are physically located near their shops. Shortly thereafter, Facebook told TechCrunch that Ms. Frier might have read into comments made by VP Carolyn Evenson a little too deep. In other words, Facebook did not officially confirm (nor did they deny) that such a product is being developed. I tend to agree with Bloomberg, and here’s why.
Facebook stock has tumbled since it went public; it is currently down more than 18 percent. Part of this is because the perceived demand for Facebook stock was skewed by an almost nonexistent supply in the private markets. Now, with over two billion shares outstanding, early investors are realizing they may have misjudged how much the public wanted to get into an already expensive Facebook IPO. Feel free to draw your own conclusions there, mindful of the fact that Mark Zuckerberg is still worth, like, a bajillion dollars (okay, maybe only 14 billion…).
The second factor I believe is contributing to the poor performance of Facebook’s stock is the trouble investors perceive with monetizing Facebook’s mobile users; a problem faced by many mobile app developers. But why is it so hard to monetize mobile users? After all, Facebook has all the money and the talent in the world to make it happen.
The three most commonly cited reasons why mobile ad revenue is so hard are: (1) a small screen; (2) limited attention spans users give their phone (I usually check mine when I’m waiting in line, or have some other fleeting moment of “down time”); and, (3) privacy concerns. But, even if privacy wasn’t an issue (even though it’s a huge issue), the first two reasons have given developers a hard enough time engaging and converting views into clicks and sales
Given Facebook’s need to monetize its mobile users, I tend to agree with the Bloomberg report; hyperlocal mobile ads are just around the corner. Taken a step further, we combine Facebook’s need to boost revenues with Apple’s reported “deep integration” of Facebook in iOS6 (perhaps making it easier for Facebook to gather location data?), and I’m thinking we’ll see a beta by the end of this year.
Now the question is, as always, what will you do to implement and capitalize on this new form of advertising with your app? How can you deliver timely advertisements to mobile users in a way that will entice them to go spend money at a nearby store? When you have perfected the magic sauce for mobile adverting, leave the recipe in the comments below; we’ll have a cookout.