Facebook: Small Announcements Equal Big Mobile Focus
It’s been a busy week for Facebook, announcing a number of small changes and launches. Individually none of them seems like that big a deal, but together they paint a picture of a huge strategic focus on mobile.
Behind all these decisions there seems to be an underlying goal of making money off those fast-growing mobile users. Facebook's plan: to turn its mobile app from an afterthought to the website, into a true stand-alone, profitable service.
Thursday night, Facebook launched an “App Center” with 600 social apps. Facebook will offer users custom recommendations for apps, based on what apps they and their friends already use. By promoting the best apps, Facebook wants to encourage developers to work on Facebook’s platform—rather than just focusing on the popular Apple iOs and Google Android platforms. Easier access to more, better apps will hopefully lure Facebook users to engage more on the apps—which means more opportunities to show them ads.
Facebook has also made changes to make it easier for users to make payments within* mobile apps. The new mobile payments system—dubbed “low-friction carrier billing”—allows Facebook users to buy virtual goods or services within mobile apps and easily charge the payments to their mobile carriers. Facebook gets a cut of those payments, of course. And for the first time, with the launch of the app store, developers can now sell apps on the platform. Facebook’s cut from app downloads should yield another revenue stream.
Wedbush’s Michael Pachter tells me that while the App Center won’t be material to Facebook’s results “for at least a couple years,” it will have a meaningful impact on how people use Facebook’s mobile app. “It will take some time for developers to come up with apps that enhance the Facebook experience,” Pachter says. “But once the apps gain critical mass, app store usage and revenue should grow exponentially.”
BTIG analyst Richard Greenfield says if the App Center “can drive usage of social apps, overall Facebook engagement and reliance on Facebook increases.”
In yet another move to expand mobile revenue, this week saw a development that made it easier for marketers to buy mobile ads. Instead of only offering mobile ads as part of a premium ad package, now marketers can just buy Facebook’s mobile-only ad product, “sponsored stories,” which republish messages that users have posted about brands.
We’ll see what Facebook says about what all these announcements add up to, when the company reports its first quarterly earnings.
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