We all know that Facebook, as a social network, makes most of its money through ads. If you point the browser on your computer to facebook.com, you will see a lot of ads on the right side of the page. All these advertisers pay the social network some amount of money to put their company’s ad in that place. But Facebook gets this money only if users of the social network actually see these ads. If you are on a computer, you will definitely see the ads, but what if you are on a mobile device?
Facebook today has an official mobile app on almost every mobile device, Android, iPhone, Windows Phone, BlackBerry, and even feature phones. When you have a billion customers using your product, you need to make it easy for them to use your product in every possible way. But if you are logging in to Facebook on a mobile device, you do not get to see any ads. This translates to no money for Facebook from advertisements. This has become a very major problem for the world’s largest social network today.
Google, which is another major company which has almost all of its business on the internet, mostly makes money out of advertisements. According to the company’s quarterly earnings report, it made $1.3 billion in revenue only from ads in the fourth quarter of 2012. That is 83% of its total revenue, which is just over $1.5 billion. According to reports, this means that Google gets $7 in revenue per user. For Facebook, this figure comes down to $1.54 per user.
As more and more number of Facebook users are starting to get social on their mobile devices, the number of ads that a user sees is reducing. So, the social network is losing money. According to The Verge, that led to a loss of $59 million for Facebook in the fourth quarter of 2012. This has become a major problem for the stockholders and the people over at the Wall Street.
What is the solution for this? Facebook will either have to think of a different means of generating revenue, or will have to start putting ads on its mobile apps. And if people start seeing ads on their mobile devices as well, there is a very good chance that they will reduce using Facebook, which is an adverse effect. So what do you think is a good solution?
Source: Android Authority