Facebook Reorients Itself for a Small-Screen World
At Facebook’s headquarters here, mobile devices are everywhere. The first thing visitors do is sign in on iPads at the front desk. Employees at the campus coffee shop use iPads as cash registers. Instead of sending e-mails, Facebook employees prefer to use the company’s messaging system, which pops up new messages on both mobile devices and PCs.
Mobile is clearly on the company’s mind, especially now that people are spending more time using Facebook through mobile apps than on computers. And on Wall Street, investors are putting pressure on Mark Zuckerberg’s social network to master the mobile world so it can speed up growth and lift its sagging stock.
But the challenge for Facebook, along with other companies like Google that got their start on the Web, is figuring the best way to serve ads to mobile users without cluttering up their small screens and driving them away in frustration. For now, mobile ads bring in less money than standard Web ads, so the shift to mobile threatens to undermine Facebook’s revenue. Facebook’s executives say the company is diving deep into mobile, starting with new versions of its apps for the iPhone and iPad, which it released Thursday. Users had complained that the apps were sluggish; more than half of those who rated Facebook’s iPhone app in the Apple App Store gave it one star out of five. The new apps are faster because they were rewritten in the native programming language of Apple’s devices, replacing most of the Web-based technology used in previous versions.
The apps are part of what Facebook executives say is a transformation into a “mobile first” company. Developing mobile products has been made a priority, they said in recent interviews, and every team inside the company has been reorganized with the goal of inserting mobile into its DNA.
“We have basically retooled and focused the company around mobile,” said Mike Schroepfer, vice president for engineering of Facebook. “It’s been a huge change.”
As part of the reformation, product teams have been arranged so that they now make mobile versions of new features at the same time that they are developed for the main Web site. Before, the company would make new features for the Web site, then a core mobile team would follow up with translations for mobile devices.
Facebook is also trying to spread mobile expertise throughout the company. Its top engineers hold training sessions every week for 20 employees at a time, teaching them how to program for Apple and Android devices. About 100 engineers are now working on Facebook’s mobile products, according to Cory Ondrejka, chief of mobile engineering.
With the training, the company expects to have created 200 new mobile engineers by the end of the year, Mr. Schroepfer said. Soon these classes will be open to any Facebook employee who wants to come, including those from areas like marketing and design.
Richard Greenfield, a media analyst at BTIG, described mobile as both a blessing and a curse for Facebook. Advertisers like that their ads are difficult to ignore on smaller screens — but at the same time, that’s what annoys users. “It’s what we call the mobile Catch-22,” he said. “You’re kind of stuck.”
And mobile ads have less potential to be creative because there is less to work with, Mr. Greenfield said. For instance, many mobile devices don’t run Adobe Flash, which is commonly used to animate ads. When Facebook filed for its initial public offering in February, it listed the rise of mobile as a potential risk, because it had not yet discovered a clear strategy for making money on phones and tablets. Lately it has been trying out several approaches.
Gokul Rajaram, product director of ads at Facebook, said the company’s strategy would mostly focus on so-called sponsored stories, which treat posts from users as ads, amplifying word of mouth. For example, if a user clicked the Like button on the Facebook page of a certain band, some of his friends might see a notice about this when they visit the site. But if that band chose to sponsor that Like, the notice would show up on most of the friends’ news feeds, on both mobile devices and the Web site.
Facebook started using sponsored stories in February, and they now generate about $1 million of revenue a day, about half of which comes from mobile users, according to Mr. Rajaram.
A newer ad method that Facebook is testing is called Offers, in which a company can post a hot offer on its Facebook page, like a discount for a restaurant. If someone claims this offer, a notice can show up in some friends’ feeds; if the offer is sponsored, far more friends will see it.
Another piece of the strategy is the App Center, where people can find apps for Apple and Android devices that have Facebook tie-ins. One goal of this effort is to turn the App Center into the go-to place for people to discover apps, which could entice app developers to advertise on Facebook, according to Doug Purdy, the company’s director of developer products.
Melissa Parrish, a Forrester analyst who follows mobile marketing, said the problem for Facebook and any Web company moving into mobile was that people still thought mobile advertising just meant smaller ads. This is a problem, Ms. Parrish said, because a smartphone is more than just a tiny computer. She said Facebook’s sponsored stories were a “baby step” in mobile innovation, and she would like to see the company take advantage of things like location data and the always-on connection of a smartphone.
“That kind of thing would make the advertising product — the paid media product — mobile instead of just little,” Ms. Parrish said.
In addition to the overhauled iPhone and iPad apps, Facebook has been working closely with Apple on the next version of its mobile operating system, iOS 6. Due out this fall, iOS 6 will have Facebook features built in: iPhone owners will be able to share photos directly from their photo libraries to Facebook, or use Siri, the iPhone’s voice-powered controller, to compose status updates.
Working with app platform makers like Apple and Google cedes some control of Facebook’s mobile products to them. There have been whispers that Facebook could be working on a mobile operating system and phone of its own. Facebook’s executives declined to comment on “unannounced products,” though they did not rule out the possibility of making their own mobile system.
Ross Rubin, principal analyst of Reticle Research, said that creating its own phone would allow Facebook to seize its mobile destiny. “Today they have to be content with being an ingredient partner of sorts,” he said. “Facebook becomes somewhat of a middle man.”
Mr. Rubin noted that Google has been aggressive about integrating Google Plus, its Facebook competitor, into its Android phones. He said there was an opportunity for Facebook to take an approach like that of Amazon, which modified Google’s freely available Android software to create the Kindle Fire tablet.