Mark Zuckerberg is yet to reveal to his investors his strategy to generate meaningful revenue from mobile traffic. I’m thinking Zuckerberg could be planning something big, and Facebook is fortunate to actually have the #1 guy in America to figure that out: Gokul Rajaram (you can read what Business Insider thinks).
If you remember Google when it was just a search engine, and before Google had an “Adsense” product, it’s because Rajaram was yet to be at Google. Upon his arrival, the way Internet was monetized has changed, with “Ads by Google” widgets starting to pop on nearly every page on the Web.
Solving Google monetization is one big achievement. Now it’s Facebook’s turn, and rest assured – I’m sure Rajaram is on it.
Facebook’s monetization challenge is unique, as it is not necessarily trying to solve its own problem, but rather solve an industry problem: mobile.
The mobile screen is small. On a per ad-unit, mobile ads actually make higher RPMs, but you can only display 1-2 ads, versus desktop ads where you can display 20 ads that make less money each. Mathematically speaking, then, the solution need to be some sort of media/invention that generate per real estate substantial higher RPMs than regular mobile ads, to compensate for the smaller number of ads.
Could the solution be Facebook Video? I don’t know the answer
However, let’s do some “If A=B, and B=C then A=C”:
- “Premium “video generate $25-$60 over lower single digit for display ads.
- YouTube has been around for almost 10 years. Industries in the past have been more likely to change in a big way every 10 years.
- YouTube realized that UGC generates no money and premium makes a lot. For that it created the Partner program and got premium publishers to give it content. Facebook needs some sort of high-CPM media to boost its mobile traffic with $
- Who has an existing premium video business? (Hint: it’s not YouTube. Read next bullet).
- Netflix CEO Reed Hastings last week was reported to buy $1 million in Facebook stock. Hastings is also a Facebook board member. Now granted, please note that Netflix is not based on ads, but will we see a revolution coming from some sort of partnership, -- the king of social and the king of premium content? Maybe not Netflix but someone similar (“a Netflix”)?
= Facebook + “a Netflix” > Youtube
= Facebook + “a Netflix” = making headway to monetize mobile traffic?
I think big companies must remember that every 10 years people will give an alternative solution a real chance. Yahoo to Google. MySpace to Facebook. RIM to Apple/Android.
I don’t know how a video product would look like on FB. Would it bead-based, subscription based, auto-play, click-to-play? I’m not sure.
But can premium video help Facebook’s mobile monetization? I think so.
And is it a great target to try and win YouTube’s business? Absolutely.