Facebook has a longstanding problem of making money out of it's mobile platform. It goes something like this;
* Facebook is funded from advertising revenue
* Targeted advertising on Facebook is very alluring and companies are happy to pay for it
* Facebook has 845 million active users that advertisements can be served to
* More than half (425 million to be exact) access the site via a mobile device
* Facebook does not serve advertising over mobile device
You can easily see how that's a huge problem for the bottom line of the company and it was made clear in the IPO announcement that Facebook is working to address the problem. However, serving advertisements to mobile users across multiple mobile operating systems and multiple App Stores is a formidable challenge in itself. There is no denying that the iTunes Store is very particular about the advertising that is allowed and that does not bode well will Facebook. After all, in Facebook's balance sheets there is no space for an iTunes tax and there never will be.
On top of that, Microsoft is slowly proving to the as tyrannical as Apple has ever been about their App Store. In essence, Facebook needs a map to a potential mine field and needs it fast.
Here's an interesting development from the new age giant that might provide a bit of an insight into the future revenue stream. TechCrunch, recently published an article about application bookmarks in the newsfeed. What it essentially does, is it allows you to see quick links to applications that you use a lot. It's all great and the point that Josh Constantine makes is right on the money but here's something else.
With recent additions to the Facebook platform, you can now share with friends what it is that you are doing but essentially what you are doing is advertising the content provider of your activity. So how valuable do you think that is? I'd say extremely and the advertising industry know that. In fact, it is no secret that recommendations from friends are one of the most effective advertisements that you can ever get and word of mouth is the Mecca of the advertising business. Can you do this on a large scale? Not so much, at least not until now. Think about it this way, Facebook has the means of charging companies based on word of mouth advertising. You share a company's name with your friends, Facebook gets money. You add an application to your favourites, Facebook gets even more money. And you as the user, never get to see any annoying banners and yet you are the driving force behind the largest advertising agency in the world.
Yeah, I know, it's maybe a bit Utopian and a bit ambitious but if I wake up tomorrow to a world like this it would be no surprise at all. Facebook has in fact provided brands with a new advertising medium and they will be allowed to charge for it. You on the other hand can do exactly what you've always done and tell all your friends about the brands and products that you feel passionate about. And companies actually get to compete on a levelled field provided that they have the entrance fee. And if you have doubts as to will this ever work and why should brands pay for it ... look at what Twitter is thinking of making money from.
