(By Mani) Shares of Facebook, Inc. (NASDAQ:FB
) shares increased 8 percent Wednesday. In his first interview since the IPO, Mark Zuckerberg hinted at new growth from mobile to search, and allayed some investor concerns.
But, the key question is whether Facebook would succeed with its mobile strategy by overcoming the current hiccups that threatens to compromise user experience. Facebook's mobile strategy as mobile ads is the key long-term challenge for Facebook.
He assured that Facebook likely will make more money on mobile than desktop. Desktop display product was a stand-alone effort, whereas mobile is integrated, with ads performing better.
Zuckerberg believes people misunderstand Facebook's mobile opportunity. Six months ago there was not a single ad on mobile, and today the company has numerous ad products.
Though it makes sense that more mobile phones would spur usage boosting daily active users (DAUs), but does not ensure greater time spent, which in turn motivates users to click ads.
Consumers respond better to messages, notifications in mobile versus desktop where they spend more time digging into profiles, playing games, etc.
In addition, Facebook users do not mind ads on the desktop as they could be easily ignored; however, the smaller screens on mobile make it more difficult to ignore the ads that in turn may affect the user experience.
Facebook is betting heavily on sponsored stories to monetize mobile opportunities. Here, the consumers are exposed to sponsored stories or offers in their Facebook news feed based on what brands/products their Facebook friends "Like" or when their Friends claim an offer that a brand is paying to have promoted.
"While in theory this sounds like a great idea, we believe the overwhelming majority of Facebook users have no idea that by clicking "Like" they end up spamming their friends with ads promoting their Like," BTIG Research analyst Richard Greenfield said in a blog post.
For instance, a user may have Like'd Walmart two years ago when they were running a promotion/discount that required the consumer to Like them, but if Walmart is now running a campaign on Facebook to acquire Likes, a user's Like will be promoted to all his friends to get them to Like Walmart.
"We understand Facebook needs to generate revenue, however we are concerned that the manner in which they are monetizing may jeopardize the platform itself," Greenfield said.
In short, Facebook do need advertising dollars to grow revenue, but must do so in a way that protects the core user experience.