After a continuous swirl of rumours speculating the arrival of the Facebook phone (All Things D first reported on project ‘Buffy’ back in 2011), Mark Zuckerberg finally unveiled his mobile strategy last week.
Rather than building its own smartphone, as originally anticipated, Facebook took a far more intelligent approach and launched Home, its new software for Android operating systems. The app will see users’ traditional home screen and menu replaced with ‘CoverFeed’, which displays Facebook notifications, images and message.
So why the decision to create software rather than hardware? Free to download, the app can effectively be accessed by any of the 680m mobile users who own an Android device. As Zuckerberg said himself: “We're not building a phone, and we're not building an operating system. A great phone might sell 10 or 20 million units. Our user base is at about a billion. Even if we made a great phone, we'd only be serving one or 2% of our base.”
Last week, EMarketer reported that it expects Facebook to generate $965m in US mobile ad revenue in 2013 – 2.5 times the $391m in 2012. Facebook has made no attempts to disguise its plans to monetise the network through mobile and so whilst Zuckerberg hailed Home as being designed “around people, not apps”, the new venture is almost certain to include a sophisticated advertising model with opportunities for marketers.
A day after the launch, Zuckerberg told a number of reporters during a Q&A session of plans to host advertisements on Cover Feed: “There are no ads in this yet. I’m sure that one day there will be,” he said.
Forrester’s Charles Golvin said in a blog post: “Since Facebook's business model is almost exclusively advertising-based, Facebook must envision a radical shift in the future chain of commerce — moving awareness and discovery from search to social, powered by Facebook's trove of personal information to enrich the value of the ads it enables. Such a disruption in behavior will take a long time to obtain.”
However, some have speculated that this ramped up advertising model may annoy already frustrated users. Jan Dawson, chief telecoms analyst at Ovum, said of Home: “It will allow Facebook to track more of a user's behaviour on devices, and present more opportunities to serve up advertising, which is Facebook's main business model. And that presents the biggest obstacle to success for this experiment: Facebook's objectives and users' are once again in conflict. Users don't want more advertising or tracking, and Facebook wants to do more of both.”
So how can marketers exploit the potentials of Facebook Home without alienating customers?
Jonny Rosemont from DBD media said in a blog post: “Facebook is going after everyone. For marketers this obviously means greater influence potential through Facebook. There will be unique advertising opportunities on the Cover Feed and developers will be able to do many an interesting thing. Facebook Page owners will also need to consider their mobile content strategy if they haven’t already done so.
“This launch also raises an interesting debate about data. Facebook will be present wherever you are, it will know what you are doing, where you are and whom you chat to at those moments. Better targeting? You betcha. Another privacy storm is already opening up.”
James Hilton, M&C Saatchi Mobile Global CEO, added: “The fact that Facebook Home is a hybrid of an app and operating system means that there will be much deeper data to enable more targeted advertising. The overlaying of Google Home on top of Android means that we can rapidly factor the new opportunities into our media plans. Also, having social at the centre of the HTC First's functionality may also trigger deeper social integration by other OS & handset developers, meaning better opportunities for advertisers across the entire mobile ecosystem.
We're very interested to see how Facebook will weave advertising into the Google Home experience as people will possibly transition their attention away from the dedicated app into the more integrated, overall experience."
But Mick Rigby, MD at Yodel Mobile, commented that whilst Facebook's been a phenomenon online (and therefore has a huge share of mobile internet and app usage) the value of this to a brand and advertiser could be limited, as high usage doesn't necessarily translate into engagement on mobile.
However, he added: “If Facebook is able to overlay behavioural/location and interest targeting with this new phone functionality and therefore create a reason for engagement, then brands and advertisers will be better off. If this is the case, then a Facebook ad platform could bring the value back into the mobile ad ecosystem that it is currently lacking in many of the existing environments.”
And Steve Richards, MD at social media agency Yomego, has also raised doubts over Home’s popularity with consumers:
“For this phone to have any serious impact, enough people will need to choose it over a long period of time as contracts are renewed. That means enough people will want to experience Facebook to the exclusion - or at least, relegation, of other platforms. And then the question follows: Will it change behaviour in the social space?
“This device merely changes the experience of what is already largely a mobile interaction. It's also only likely to affect a small number of people (this will apparently be an HTC device, which is currently losing market share to rivals and recently dropped out of the world's top five smartphone manufacturers). So the conclusion has to be: "unlikely". It's a nice option for Facebook to have, and is no doubt driven by the corporate compulsion to drive revenues, but there will have to be hugely compelling reasons for people to choose,” he said.
As Richards highlights, whether Facebook Home takes off really depends on engaging and encouraging users to download. How marketers can benefit really depends on Facebook's ability not to deploy an aggressive advertising strategy and alienate users.
And in this respect, there are already huge concerns. Only last month the social network was warned that its plans for expansion of Facebook Exchange - the advertising system that enables marketers to tailor messages to users based on their browsing history - from the graphical display ads on the side of the user’s page to the ads in its news feed, would be viewed as "aggressive" by users, and could spark a backlash.
Till Faida, co-founder of Adblock Plus, has highlighted recent research that suggests there is a direct link between more intrusive advertising and user frustration. Over two thirds (69%) of respondents to a survey in the UK said that online advertising had become more intrusive over the last two years.
“Marketers need to address this issue and ensure that they do not alienate users, as they are clearly doing so currently," said Faida, who warned that recent plans from the social network suggested that "users' frustration will only grow."
He warned: "Those who are aware of tracking and aggressive marketing techniques will not be happy about this move and Facebook will see a backlash from its users."
Will Facebook's crusade to boost its revenue, prove to be its undoing? Should advertisers be wary about Facebook if users are becoming antagonised by "aggressive" marketing? What do you think of Facebook Home? Do you think it'll bring benefits for marketers?