Facebook's quest for the Mobile Grail

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By all that is Holy! Facebook's quest for the Mobile Grail
By all that is Holy! Facebook's quest for the Mobile Grail

Facebook's announcement last week that it would begin testing a third-party mobile ad network should prove a boon to marketers looking to enrich their ability to target customers on mobile devices. According to industry observers, this means that social graph-based targeting—using an individual's social media activity to determine which ads are delivered to that individual—is now a reality in mobile messaging.

“Graph-based targeting has always been a big need for marketers, and until now it's been pretty limited,” says Nathanial Perez, head of social experience at SapientNitro. “There had to be a way for people to share social information by opting in.” Perez notes that Zynga games like Farmville were among the few that offered this capability. “Now this third-party ad network opens it up to all,” Perez says. “It's the Holy Grail.”

Though Facebook has released no specifics beyond stating that ads and messaging would be delivered by third-party providers, here's how the system will most likely work based on accounts from mobile marketers and analysts:

An advertiser places a bid to reach a certain target within the user universe of Facebook, which has shared biographical and social data of users with mobile ad exchanges. If a Facebook user visits an app where there's a placement set to target her for a certain attribute or behavior, she is shown the ad. Imagine, for instance, a person who has “liked” several car brands and solicited purchase advice from friends on Facebook. She's out car-shopping one Saturday, clicks onto the Cars.com app on her phone, and gets served an ad for the new Dodge Dart.

“Facebook has so much data and such a footprint that they will be a factor in mobile,” says Clark Fredricksen, VP of communications at eMarketer. “The 'like' button is everywhere. So many people link to other sites on the Web through Facebook.”

Facebook made its announcement in the same week that eMarketer declared that Google was about to overtake the social network as the leader in sales of online display ads. The search engine giant also was poised to assume the top spot in all three categories of digital advertising: search, display, and mobile. But Google is not likely to hold that dominant position for long in the face of Facebook's announcement, observers believe, even though it accounted for more than half of mobile media spending last year.

“If you look at what Google does at the surface, it targets very trivial behaviors: what people search for,” says Perez. “Google has built an ecosystem around what people do, but Facebook has built a system around how people consume information in a social context. Pound for pound, social behavior is far stronger than individual behavior.”

One thing is certain: Marketers will have some time rework their mobile strategies before the dawn of the Facebook advertising era. Despite a near acclamation of opinion in marketing circles that “the third screen will become the first screen,” mobile accounted for only 4% of total digital ad spending in 2011 with $1.45 billion in bookings, according to eMarketer.

The pace of growth is quickening, however, especially with Facebook entering the race. Mobile should account for 20% of digital spending by 2016 when it approaches $12 billion, according to eMarketer.

By then, brands had better have their mobile acts together, advises Brent Hieggelke, CMO of app provider Urban Airship. “If they're going to be spending a lot of money on mobile ads, brands better have a mobile strategy and a successful app in place,” hesays. “Then Facebook mobile can be a fantastic way to be laser-focused on targets.”

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