Facebook Promises Big Investment in Mobile

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Facebook now boasts more than 901 million users worldwide which is up 33% from 680 million a year ago.  50% of users (488 million) now access Facebook via mobile device each month but Facebook doesn't seem to be monetizing this traffic yet.  The Facebook iPad application still needs a bit of work in my opinion as many view photos and status updates on applications like Flipboard.  Facebook's user interface is complicated for many users and simplification will be key for mobile engagement.

Facebook will likely look to mobile advertising as a major future source of revenue source. It has promised significant investments in its mobile platform during its IPO road show. “Mobile is a key area of growth for Facebook,” said COO Sheryl Sandberg. Sandberg cited examples including Sponsored Stories posts from friends or Facebook Pages that a business, organization or individual has paid to highlight which are now directly inserted into users' mobile News Feeds.

Sponsored Stories enable advertisers to get distribution of stories directly into user content.  Only a small fraction of Facebook's impressions are Sponsored Stories, which gives mobile a lot of room to grow.  Facebook plans to invest heavily in mobile, even if its moves have a negative impact on the company's operating margins.

Last month, Facebook purchased photo-sharing application Instagram for $1 billion, its largest acquisition to date. Days later, Facebook snapped up Tagtile, which supplies mobile loyalty and customer management solutions targeting the local business segment.

Facebook sold 421.2 million shares in an IPO at $38 each to raise $16 billion, valuing the social network at $104.2 billion.  The stock traded down 10% to $33 the week following. Will Facebook need to acquire other mobile companies in order to gain share in mobile?  Will these ads be based on location?  Will they pay off for advertisers?  

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