This week in 2004, Harvard undergrads became the first group to use Facebook — the social network launched at the college. Fast-forward a decade, and the company is a technology mammoth, with 1.23 billion users and profit of US$1.5 billion for 2013.
Facebook is by most accounts a gargantuan success, and it is putting the pieces in place for its next decade and beyond. Those pieces point to a mobile future.
Facebook was somewhat late to the game with mobile. Before its 2012 acquisition of Instagram, it had neglected the rise of smartphones in favor of the PC. Now, however, Facebook has switched focus to mobile and already is starting to see the benefits.
All About Advertising
Many investors were concerned Facebook was losing out on advertising revenue as users shifted to mobile. Yet the company revealed in last week’s fourth-quarter earnings report that mobile advertising accounted for 53 percent of the $2.34 billion total advertising revenue, up from 23 percent in the year-ago period. Perhaps not coincidentally, Instagram started displaying ads for the first time last quarter.
The focus on mobile is set to intensify further with this week’s launch of Paper, a new mobile app for viewing user-generated and curated content.
The application is the first to be released by the company’s Creative Labs division. The unit allows small teams at the company to create standalone mobile apps outside of the core Facebook experience.
“Last week’s financial results are an indication that Facebook has been closer to understanding the mobile ads business and has attracted the attention of corporate clients in trying out its mobile ad solutions,” said Markos Zachariadis, assistant professor of information systems at Warwick Business School.
“Both the acquisition of Instagram and the development of Paper show that Facebook is making a move from its traditional Web-based page towards mobile solutions that will meet the demands of both its user-base and organizations that are looking to reach out to consumers in a more dynamic way,” he told the E-Commerce Times.
“Predictions for the near future suggest that in 2017 nearly 4 billion people will access the Internet through their smartphone,” Zachariadis added. “To put this into perspective, you need to compare with the current figure of Internet users — less than 3 billion from both mobile and desktop devices.”
Facebook is headed “in a good direction,” he concluded.
CEO Mark Zuckerberg, meanwhile, hinted at some future plans in an interview with Bloomberg last week. His three-year plan puts mobile at the forefront — he declared at an all-hands meeting in early 2012 that Facebook would be a mobile-first company from then on.
Facebook may become a little more lax with its requirement for users to use their real names, Zuckerberg suggested. That rule that has seen many would-be users in countries with oppressive regimes turn to pseudonym-friendly Twitter to get involved in the global conversation. Future Facebook apps may not require users to log in with Facebook credentials.
Solving New Problems
Within the next five years, Facebook aims to become more intuitive and help users solve problems they may not even have considered. When users turn to their Facebook friends for advice on finding a great local dentist or restaurant, for instance, Facebook should be doing better at using its trove of data to answer those questions, Zuckerberg told Bloomberg.
Over the next decade, Facebook will work to expand Internet access to the billions of people who do not yet have it, he said. Facebook has teamed up with technology companies like Samsung and Qualcomm on Internet.org, a project that aims to help users in developing countries get access to Web services, including Facebook, through cheaper phones.
Facebook still faces many challenges in the years ahead.
Security, Cultural Concerns
“Challenges in security and privacy are two major concerns [of] global social networks, including interorganizational networks,” said Warwick Business School’s Zachariadis.
“Also, compliance with local and international laws and regulations is a matter that often emerges as part of the globalization agenda. If Facebook’s target — as Mark Zuckerberg suggests — is to socially connect the whole world, these are issues that need to be addresses regardless … of the strategy the company will choose to move forward.”
Elsewhere, Facebook might have to work harder to maintain user interest.
“They’re going to have to continue to do things that are engaging people and getting people to share and drive traffic in that regard,” said Gordon Owens, digital marketing professional at GO Digital WSI.
“It’s a household name now, so no one thinks about it. They need to keep doing things that make people go back and say, ‘This new thing Facebook’s doing is really cool and I’ve gotta go check it out,'” he told the E-Commerce Times.
“With a massive audience like that, they’re just one or two wrong moves away from losing a ton of people,” Owens suggested. “If you have some massive security breach or people find out that Facebook has been feeding all their data to the NSA — all of a sudden everyone stops using it. I think you sort of run that risk. Other than that, they would have to do something utterly, drastically wrong to not be able to continue to drive revenue into the future.”