Thursday, October 25, 2012

Mobile-ad struggles mean another slow quarter for Facebook

Facebook Inc. is set to post another quarter of slowing revenue growth after struggling to wring money from advertisers seeking to connect with users of mobile devices. [...] though Facebook has started sending more marketing messages to mobile users, it has yet to prove that ads on smaller screens are attracting attention without alienating their target audience. Facebook has lost more than $40 billion in market value since its May 17 IPO, when it sold shares at $38 apiece, or 107 times trailing 12-month earnings - a price that made it more expensive than 99 percent of all Standard & Poor's 500 Index companies at the time. Ads that are popular on the desktop don't easily translate to mobile devices, where the smaller screens make it trickier to push marketing efforts, and therefore are less lucrative, according to EMarketer. [...] the company aims to stand out with a different approach to mobile advertising, using data on user preferences and connections to improve marketing messages, Kanter said. Instead of just slapping on a banner ad that takes up 15 percent to 20 percent of the screen, Facebook wants to "insert a story" that includes an advertiser's message straight into a user's News Feed, which includes text and photos from friends. [...] marketers that don't mind simpler text ads designed for an immediate response - like those Facebook's mobile service offers - don't receive the same results they might get by advertising on Google's search engine, he said. The social network then added Promoted Posts, in which companies can highlight marketing messages to their fans and friends of fans., an online marketplace for high-end goods such as furniture, clothing and artwork, will more than double ad spending on Facebook this year to at least $20 million and plans to spend $1 million or more on mobile advertising, partly because of the social network's new offerings, said Chief Executive Officer Jason Goldberg.

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