Why the future of Facebook is (almost) all about your smartphone

10 steps to understanding how mobile is now the driving force behind the world’s biggest social network

Facebook started life as a website, but in 2014 it is mobile devices driving its growth. Mobile is the dominant influence on pretty much every new feature the social network launches.

Even back in October 2012, the chief executive, Mark Zuckerberg, was telling analysts that “today there’s no argument: Facebook is a mobile company”. Fast forward to the end of March 2014, and that company had more than 1 billion active mobile users.

“If 2012 was the year we turned our core product into a mobile product, then 2013 was the year when we turned our business into a mobile business,” said Zuckerberg in April. “I expect 2014 will be the year when we begin to deliver new and engaging types of mobile experiences.”

What those experiences are is already becoming clear. Here’s a breakdown of how mobile has become Facebook’s firmest friend, and what it means for the future of the world’s biggest social network.

1. Mobile usage of Facebook is still growing

That “1 billion monthly active mobile users” stat in the first quarter of 2014 was up 34% compared with the same period in 2013. What’s more, Facebook’s daily active mobile users rose 43% to 609 million in the same period.

Of Facebook’s overall daily active users, only 55% access it from their mobiles: that’s around 441 million people. Meanwhile, the separate Instagram and Facebook Messenger apps each have more than 200 million monthly active users, with WhatsApp – bought by Facebook for $19bn earlier this year – already used by 500 million people.

This is translating into more money for Facebook through advertising: 59% of its $2.3bn of ad revenues in the first quarter of this year came from mobile, a proportion that stood at 30% in the first quarter of 2013, and just 14% in the third quarter of 2012.

When ice-cream brand Ben & Jerry’s ran a Facebook advertising campaign early this year, it reached 14m people – and 90% of them saw the ad on their mobile devices. Mobile growth isn’t just about usage for Facebook, it’s about hard dollars too.

2. Facebook is 'unbundling the big blue app'

Facebook’s big mobile strategy in 2014 is to get people using a range of its apps, not just its main one. Acquisitions like Instagram and WhatsApp are part of that strategy, but so is Messenger, with people currently being forced to install the latter app if they want to continue accessing their Facebook private messages inbox from their smartphones.

Also, see the new Facebook apps being built in-house by its Creative Labs division: news-reading app Paper, and the upcoming (and recently “accidentally” launched) Snapchat-style photo and video-sharing app Slingshot.

“In mobile there’s a big premium on creating single-purpose first-class experiences. So what we’re doing with Creative Labs is basically unbundling the big blue app,” Zuckerberg told the New York Times in April.

Facebook’s strategy for these new apps is to launch them, add and remove features based on early feedback, then try to get them up to 100m active users each before starting to make money from them.

“We want to provide the best tools to share with different size, groups and in different contexts, and to develop more mobile experiences beyond just the main Facebook app, like Instagram and Messenger,” Zuckerberg told analysts in February.

3. It isn’t afraid to splash the cash on external apps

Facebook isn’t just building new apps: it’s willing to buy them too. Paying $1bn for Instagram in April 2012 raised a few eyebrows, but it was eclipsed by the $19bn for WhatsApp in February 2014 – with those deals sandwiching a rejected $3bn bid for Snapchat in 2013.

Fitness-tracking app Moves was snapped up for an undisclosed (i.e. not in the billions) amount in April this year, but there has also been a steady stream of acquisitions of mobile startups: Beluga, Snaptu, Push Pop Press, Gowalla, Spool, Parse, Jibbigo, Onavo and more.

Often, the aim is to bag a talented team of developers and/or some innovative technology: the actual apps are usually shut down, although they live on within Facebook’s own products.

4. Coming to your mobile: more Facebook ad formats

Facebook is making more money from mobile advertising because it’s showing more ads in your mobile news feed – and charging advertisers more for the fine-tuned targeting based on its massive stash of user data.

It’s also experimenting with new formats though. “Premium Video Ads” were tested from December 2013, then launched properly in March 2014: 15-second clips that automatically play (silently) as you scroll past them, but then expand to full-screen with sound when tapped on.

Instagram launched its own in-stream ads in the US in October 2013, and has just announced that they’re expanding to the UK, Canada and Australia. But now Facebook is also launching something called Audience Network – its own network of mobile ads inside other companies’ apps, using its own targeting.

In other words, even if you're not using Facebook's own apps, you may still be seeing its ads elsewhere.

5. The delicate balancing act between ads and updates

As Facebook shows more ads in your news feed, does that mean you’re seeing less updates from the friends and pages you care about? It’s a hot-potato issue that rightfully sparks a lot of debate.

Facebook argues that if it gets mobile advertising right, the ads you see will be for things you care about too. It has also argued that its news feed algorithm is firmly focused on relevancy: plucking out 300-odd stories a day for you to see, from a potential 1,500.

Which 300 you see depends on factors including how often you interact with their creators; how much those posts have already been liked, shared and commented on by your friends and the wider world; how much you've shown an interest in those kinds of post in the past; and whether people are hiding or reporting them.

Marketing folk have been complaining vociferously in recent months about declining “organic page reach” – the number of people who’ve liked their page that see a particular update – while Facebook argues that the reason is relevancy, not advertising.

“We've gotten better at showing high-quality content, and we've cleaned up News Feed spam,” claimed Facebook recently. But as its advertising business continues to grow, questions about the respective priority of ads, status updates and page posts will continue to fly.

6. Facebook is changing the way you use it to sign in to other apps

You’ve been able to sign in to other apps and digital services with your Facebook details for a long time now, thanks to its Facebook Connect technology. At the company’s recent f8 developer conference, it announced plans to add anonymity to the idea.

You’ll soon be able to log in to other apps using your Facebook account without sharing your details with the app’s maker, from Spotify to social game developers. The theory is that you can try out the apps without giving them your personal data, before (if you want) later tweaking the settings to share more.

Anonymous login is currently being tested with “a few developers” and sounds like a step forward for Facebook and privacy. But questions quickly emerged around just how anonymous it really is: Spotify might not know who you are if you use anonymous login, but Facebook still knows that you’re using Spotify.

7. Facebook wants to know what you’re listening to and watching

Another new feature coming to Facebook’s main app was described in late May as “a new, optional way to share and discover music, TV and movies”. Essentially it’s the equivalent of the Shazam app: technology that listens to what you're watching or listening to, and tries to identify it.

Facebook says this will be used purely as another tag for your status updates – “if you want to share that you’re listening to your favourite Beyoncé track or watching the season premiere of Game of Thrones, you can do it quickly and easily, without typing” – much like checking in to a location or tagging a friend.

The news sparked concern in some quarters that Facebook’s app will always be listening in on your media habits – interestingly, more concern than when Shazam launched exactly that in the form of its Auto Shazam feature.

Facebook says it won’t be following suit. “The microphone doesn't turn itself on, it will ask for permission,” Facebook’s Gregg Stefancik told Australian journalists in May. “It's not always listening... so it's very limited in what it is sampling.” Sceptics will be watching carefully for any change in that policy at a later date.

8. Whatever happened to the ‘Facebook Phone’?

In 2012, there was a flurry of rumours about Facebook launching its own smartphone. “Zuckerberg is worried that if he does not create a mobile phone soon Facebook will simply become an app on other mobile platforms,” as The Guardian reported it at the time.

That didn’t happen, but in April 2013 Facebook launched an Android app called Facebook Home, which took over the homescreen with Facebook features. "We're not building a phone," said Zuckerberg. "We're not building an operating system. We're building something that's a whole lot deeper."

It flopped, as did the HTC First smartphone that launched as a flagship for the new app. Home took almost a month to hit a million downloads on Android’s Google Play store, with a blizzard of negative reviews from initial users.

“We’re patient; we’re prepared to give it time. We’re believers in Home; we believe it’s going to be valuable for users,” maintained Facebook engineering director Jocelyn Goldfein in February 2014.

But Zuckerberg admitted in April that Home was “riskier” than Facebook’s other apps: “Home is your lock screen. When you install it, it’s really active, and if it does anything that you don’t like, then you’ll uninstall it,” he said.

Facebook’s strategy now appears to be less about trying to take over homescreens, and more about helping apps link more easily to one another. In April, it unveiled something called AppLinks to do exactly that, with support from the likes of Spotify, Pinterest, Mailbox, Tumblr and Flickr.

9. Facebook sees mobile as the key to emerging markets

It’s often tempting to see Facebook’s future prospects as defined by how westerners use the social network: for example, the debate about whether teenagers are fleeing Facebook for Snapchat. Actually, the company sees its future as defined just as much by the developing world.

Hence Internet.org, Facebook’s initiative to spread reliable internet access (and thus access to Facebook and its apps) to countries where connectivity hasn’t been taken for granted. Zuckerberg’s mission is to make “basic” mobile data access free.

"Text-based communication services, whether it's things like social networks or messaging or email or search, whether stock prices – basic stuff like that, that people will use on a day-to-day basis, but don't require huge amount of data," he said at the Mobile World Congress conference earlier this year.

Early partnerships with mobile operators in the Philippines and Paraguay have apparently helped 3m people get online who weren't already, but Facebook has even grander ambitions that sound like science fiction...

10. Don’t forget about the drones and lasers

As chirpy openings to a Facebook status update go, it’s hard to beat Zuckerberg’s from March 2014. “In our effort to connect the whole world with Internet.org, we've been working on ways to beam internet to people from the sky,” he wrote.

"Today, we're sharing some details of the work Facebook's Connectivity Lab is doing to build drones, satellites and lasers to deliver the internet to everyone." Mobile devices will be the main recipients of that beamed-down internet, and WhatsApp is expected to be one of the key apps making use of it.

That’s why knee-jerk analysis of Facebook’s mobile strategy is rarely a good idea. Yes, you could see that $19bn for WhatsApp as a panicked response to an app capable of stealing young users away from Facebook in the west.

But what if it’s more a big bet on what people of all ages might want to use elsewhere in the world – as an alternative to the text messaging traditionally offered by the very same operators who are striking zero-data partnerships with Facebook in the developing world?

If nothing else, Facebook's mobile strategy is about the long game, although whether it will be successful is a question that will have to wait a few years.

What do Facebook users need to know about the F8 conference?

Contributor

Stuart Dredge

The GuardianTramp

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