Mobile Fix: Facebook sees huge mobile ad success. Why?
Few people are getting mobile ads right, but Facebook is bucking the trend says Addictive!’s Simon Andrews. The company’s new results showed a fantastic performance – $656 million in mobile ad revenue – up from virtually nothing a year ago. Why this success?
Whilst we have been relaxing on the beach in Cornwall the tech world has kept up its startling momentum – with a new set of results from each of the GAFA players and some really interesting new products. So this week is something of a round up of the last couple of weeks.
Google has lots going on – and one of its people said;
“Our goal is to put computing everywhere.”
Android has been a huge factor in this – with it turning up in TVs and refrigerators as well as in millions of phones. (In the UK Android has grown to 50% of the market – up 19% on last year.)
One of the reasons for this success is also one of the problems – there are apparently around 12,000 different Android devices available (versus 6 iPhones) and getting your content or service to work in the same way on all of these is a challenge. A new report has lots of detail on this fragmentation.
One thing that struck us from this data is how well the Google Nexus 4 has done. It’s still our favourite phone but without a lot of marketing support we hadn’t expected it to get beyond early adopters – especially given the problems around the launch when availability was intermittent. But it is now the 7th best selling Android smartphone.
I suspect that Google would love their new MotoX to do as well – but that doesn’t look likely. At twice the price of the Nexus – although there are operator deals available – the initial reviews suggest it’s a good phone but not a great one. This one from the NYT is a good example;
“Unfortunately, the Moto X’s five breakthroughs don’t exactly shake the earth. It’s a fine phone, but it has to compete with the deeply satisfying beauty (and superior speakers) of the HTC One, the seething power (and superior screen) of the Galaxy S4, and the infinite app-and-accessory ecosystem (and superior voice control) of the iPhone.”
The voice control is interesting and we expect to see lots of that turn up in the next version of Google Now. And we will see lots of marketing for the MotoX so maybe they can get some cut through against Samsung.
The other new product from Google didn’t have the weight of expectation hanging over it – as it came as a complete surprise. Chromecast is a simple device that plugs in the back of your TV and enables you to stream content from pretty much any device (including iPhones and iPads) onto the TV screen. And it costs just $35.
And it is now completely sold out. Just as happened with the Nexus4.
Selling out is a nice problem to have, but it’s still a problem. Once Google get their supply chain and logistics sorted though, we will see this go mainstream very quickly.
But on the core business Google continues to struggle – like just about everyone else in mobile they are blighted by the lower cost of mobile inventory. Whilst they are selling more and more clicks on mobile, the cost per click is still lower.
We agree with the analyst quoted who said mobile ads are inexpensive yet “overpriced because the conversion rates are so low. It’s still too hard to transact on a phone.”
We are seeing progress in that more brands are (finally) investing in mobile sites. But most of these sites are actually quite poor and we need to see much more focus on mobile sites that deliver what users actually want. These sites should drive actions and conversions.
And the mobile ecology needs to mature so users can log in with Facebook, Google or Twitter and pay in a more streamlined way. Still lots to be done – and big rewards for those brands that get this right as they steal customers and revenue from the laggards.
The people who are getting mobile ads right is Facebook. Their new results showed a fantastic performance – $656 million in mobile ad revenue – up from virtually nothing a year ago. Why this success?
As we have discussed in the past it’s hard to see why a brand looking to spend on mobile would go anywhere else. Huge reach can be achieved very quickly; the targeting is unrivalled; the research to demonstrate effectiveness is very impressive and ads can be blended with the social tools built into the platform.
The only real issue is how users react to an increasing amount of ads in their news feed – especially with video ads due soon. If brands use the targeting properly so people are always seeing relevant ads, then it’s less of an issue.
As we always say, people don’t hate ads – they just hate irrelevant ads.
And they hate bad ads too. This is the one big challenge for Facebook and everyone else in mobile and social; how do we improve the creativity in this space? Especially when the targeting allows lots of different audience groups.
Industrialising creative and production – without losing the soul of the original idea – is something worth focusing on. It’s an old issue – years ago we worked on a campaign for British Gas and suggested radio. But when we asked that the background music be adapted to fit each station (Classical music for ClassicFM, Jazz for Jazz FM, dance for Kiss etc) we ran into huge problems. So the same track ended up on each station, just to save a few quid on production. The modern equivalent of this is a big opportunity.
Still on Facebook, the old adage that Talent Imitates, Genius Steals comes to mind with news that Facebook are experimenting with Trending – an obvious next step on from incorporating hashtags. Two of our current projects have a focus on celebrity and it’s fascinating how intertwined with social this space is – so to see Facebook trying to compete with Twitter on celeb content is no real surprise.
Apple
Apple has shown itself to be mortal after all – revenues up just 1% and evidence that retail traffic is waning too – 1,000 less people visit each Apple Store in a week than a year ago. All eyes are now on what Apple does next with its product line. Will the watch be enough? Maybe the cheap iPhone will make the difference?
Amazon
Amazon continues to defy industry expectations with a small loss in the last quarter despite a 22% increase in revenue. The continued focus on investment for the long term seems to be accepted by investors now.
A good illustration of Amazon’s long-term bets is online video. The company is spending hundreds of millions of dollars on licensing rights to build a large library of video that its customers can watch through their Kindle tablets and other devices. These agreements are critical as movies, music and other media – which account for 28% of Amazon’s total sales – shift from physical to digital form.
The company recently cut its biggest such deal ever, with a multi-year agreement to license television shows from Viacom, including children’s shows like Dora the Explorer and SpongeBob SquarePants.
Of course the big Amazon story this week is Jeff Bezos buying the Washington Post.
There is some speculation that he buying the newspaper for the influence it gives him, but we think its probably a bit simpler than that. Newspapers have always made a lot of their money by driving commerce – through the sale of advertising. Can Bezos find a way to link old media with new ways of selling?
Henry Blodgett has always had a good view on Amazon (he was the guy who made headlines in the dotcom boom suggesting the share price would reach $400 – adjusted for splits it’s now around $1,800) and Jeff Bezos has invested in his digital media business. His thinking on why Bezos bought the Post is a must read.