Has Facebook Figured Out Mobile?
Board: Facebook, Inc.
I stayed away from Facebook when it went public for obvious reasons that everyone knew: they had problem making money on mobile and more and more users were using mobile vs. PC or desktop. I use Facebook personally and in promoting and marketing one of the businesses I am involved in. I have used their targeted advertising to gain fans and make offers but not very successfully, at least not even close to the success we have had with Google PPC advertising in the past.
But, it appears to me that Facebook has finally figured out how to make money on mobile in a big way. No one is talking about it yet but there may be more to the sudden big push up in FB share prices in September from below $18 to above $23 before the Barron's article of last Saturday that caused it to drop a few points this last 3 days. I think the people in the know already know what's going on and they are accumulating shares before it becomes public knowledge.
Last week, Facebook changed something called Facebook Offers that was free to merchants and now merchants like me have to pay for the Facebook offers. With Facebook Offers you could create a discount offer or coupon, and promote it to your fan base for free. It never got any traction and didn't make any money for FB. And Facebook Offers was only promoted on the desktop and not on mobile. With the new change, you now see Facebook Offers on the mobile FB app also. And now, if you click on the offer, the offer is immediately send to your email address for you to use at the brick & mortar merchant or online. Another change is that now when someone claims the offer, all their FB friends get notification that so and so claimed the offer from the merchant and now all their friends know about it. It is basically making the offers viral and available on mobile. I accidentally saw this on my iPhone last week when my brother in Sweden claimed an offer from Rosetta Stone language course for $300 off their program. I tested it on my iPhone and immediately had the offer in my email box. Very impressive.
I mentioned that I have been using Facebook with targeted advertising before but not successfully. My bill was always very low for even months of advertising with them as my ad was highly targeted to a radius around our restaurant's zip code and only served to certain age group and interests, etc and the reach was very low. So, I started experimenting with the new paid Facebook Offers and created a discount offer on our restaurant FB page 2 days ago and set a budget of $10 for 3 days. Initially only your page fans who log in to FB will see the offer so within minutes it reached 10s of fans and a few claimed it. From there it goes viral to their friends and friends of friends. After 2 days it has already reached over 900 people with about 20 people claiming the offer. It appears that we only pay for the viral part of the offers that are served and about 1 penny per offer served, regardless of whether they claim the offer or not. And remember that we are only a small restaurant with little budget, but what about companies like Rosetta Stone and other large companies? Or what about thousands of small companies like us who can add up to a lot? This is like Groupon on steroids and may well be the last nail in Groupon's coffin. With Groupon, the merchant makes and offer for half off, and then Groupon keeps half of all proceeds, so the merchant is giving away 75% of their food, service, or product in hope of getting a customer. With Facebook Offers, the cost of 1 penny per offer seems quite small and it is reaching our fans for free, and then friends of our fans for a small fee.
Also, note that with the latest release of the Apple iOS6, Facebook has been highly integrated with iPhone in contacts and calendars and you can post anything on Facebook from within any app. This has not been done yet, but I think the next step for Facebook will be to use their integration with iPhone to make offers local knowing their user's location.
So, there it is. I bought into Facebook shares yesterday and also bought some December call options. Their quarterly report is in October and hopefully I am right and we will hear about their new mobile money making strategy.