Facebook’s successful pivot toward mobile monetisation offers lessons to media companies


Sometimes an anniversary and a place can have more than symbolic significance.

Mark Zuckerberg making his debut at the Mobile World Congress in Barcelona next week, on the 10th anniversary of Facebook, is such an occasion.

The timing and the place carry a strategic message.

Media companies should pay attention.

To add some perspective, Barcelona is a place where important mobile battles have been won and lost.

In 2010, Eric Schmidt, then-CEO of Google, made his first appearance at the Mobile World Congress and gave a sensational keynote. He announced Google’s new strategy – Mobile First – which back then was jaw-dropping for the auditorium (still one of those “I-was-there-moments” for me). He gave several reasons why Mobile First was essential to Google, but one sentence really summed it all up: “It’s not a phone anymore, it’s your alter ego, an extension of everything we do.”

After that announcement, the speed of the mobile revolution accelerated.

Barcelona has also been the scene of great misfortune.

It was here, in 2011, that Stephen Elop, then the newly appointed CEO of Nokia, gave his own company the kiss of death. On stage with Microsoft CEO Steve Ballmer, he announced a partnership, which meant the Finish company bet everything it had on Windows Phone, Microsoft’s operating system for mobile phones.

Two years later Nokia, had to throw in the towel and sell its mobile phone operation to Microsoft.

It probably will go down in history as one of Finland’s most disappointing defeats ever. Remember, it is a small but proud Nordic country with no more than 5 million people, who fought so bravely during World War II and refused to give in to the mighty Russians. Later, they built a mobile empire that ruled the world for many years.

The Mobile World Congress in Barcelona is a place where you either make it or break it.

Yet, not even those who make it (e.g., Eric Schmidt and Google) could guess how fast things could change.

In his keynote, Schmidt gave some predictions that were dead wrong, including one about mobile phones outselling personal computers in 2013. (That actually happened far sooner, in the fourth quarter of 2010.) In 2013 – in the fourth quarter, according to IDC – tablets outsold desktop and laptop PCs combined!

As I stressed in a previous blog post: when Eric Schmidt made the prediction about smartphones in 2010, Apple had recently launched the first iPad. Just three years later, even tablets are outselling PCs.

Even more astounding: In 2013, smartphones outsold all other mobile phones as well. More than 1 billion – 1.004 billion, to be exact – smartphones were shipped last year, according to the analyst firm IDC. That’s more than double the 494.4 million delivered in 2011.

For the first time, smartphones made up more than half of all mobile phone shipments, accounting for 55.1% of the total.

Think of it: On June 29, 2007, the very first iPhone was sold. Six years later, 1 billion smartphones are sold in just one year!

No other new technology has conquered the world with such a vengeance – not even the mobile phone as we knew it before it was redefined by Apple.

Remember, it was only 10 years ago, in 2004, that we reached the milestone of one billion mobile subscriptions worldwide.

That brings us back to Facebook, which premiered the same year, 2004, as a simple Web site for Harvard students to socialise online. Having its co-founder and CEO appear at the Mobile World Congress 10 years later could be seen as symbolic of how much the world has changed in the past decade.

But make no mistake: Mark Zuckerberg’s appearance at the world’s largest mobile tradeshow is not a mere symbolic gesture. It has strategic significance.

Two years ago, when Facebook went public, the mobile revenues were non-existent, and the company didn’t seem to have a clue how to make a viable business from other sources than generic banner ads for the desktop computer.

The social network had less than a couple of dozen engineers – out of some thousand – working on mobile applications, and the focus was on growing the desktop business.

After the initial public offering, those doubts hit Facebook’s stock hard. In a few months, the share price was 50% lower than the original offering price.

Since then, the company has rerouted its business in an impressive manner. In the last quarter of last year, 53% of ad revenue came from mobile devices. With better targeting by gender, age, and certain demographics, revenue from advertising was up 76% from 2012, for a total of US$2.34 billion in the fourth quarter.

So, when Mark Zuckerberg takes stage in Barcelona, it’s not about the anniversary. It is to emphasise “inarguably that Facebook is a mobile-first company,” as David Ebersman, the company’s chief financial officer, commented in an interview with The New York Times.

This is the key takeaway for media companies – the necessity to quickly shift your focus from desktop to mobile, much like Facebook did. Two years back, they didn’t have a clue. And now, more than half of the revenue comes from mobile.

Where is your company in that transition? To find out, ask yourself two hard questions:

  • How much of your revenue comes from mobile services?

  • How much do you invest in mobility?

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