Tuesday, 26 February 2013

Facebook partners to provide more access to its messenger

Direct from Mobile World Congress 2013 - 

Facebook’s partnership with 18 mobile operators in 14 countries in a promotion to provide free or discounted access to Facebook Messenger for Android and iOS, and Facebook for Every Phone, has the potential to deliver benefits to both the operators and to Facebook. Both parties will likely be able to use the promotion to boost customer acquisition and retention, and also to increase their revenue from mobile data and mobile advertising, respectively.

The promotion has the potential to drive existing smartphone users to download and use the Facebook application/s, and it may also help the mobile operators to gain new smart-phone and mobile data customers, whether they are new customers or customers that have been up-sold from feature-phones.

Many of the operator partners listed by Facebook for this promotion are in emerging markets, where smartphone penetration is low, but where Facebook is very popular. A number of the mobile operator partners (for example, Smart, DiGi, XL) have also been offering Facebook Zero to their subscribers, a text-only version of Facebook for which the operators do not charge their subscribers data fees. It is possible that Facebook has come under pressure from its mobile operator partners to provide a strategy that would allow them to migrate Facebook Zero subscribers to a service that would generate revenues. However it is as yet unclear whether the mobile operators concerned will shut down their Facebook Zero services. Moreover, the partnership is described as a promotion, which would seem to indicate that it has a finite lifespan.

Meanwhile, the mobile operator partners that Facebook has listed for this promotion that are in developed markets are either smaller operators that are still challenging the larger incumbents with data-centric services, or they are those that are operating in extremely competitive markets and that are therefore looking for an edge over their competitors that they believe such a promotion would give them.

Facebook will potentially benefit from the partnership by being able to increase its reach, and consequently its ability to generate revenues from advertising.
In late January Facebook’s CEO Mark Zuckerberg proclaimed that in 2012, Facebook became a mobile company. Since then the social network has either executed on or announced a number of product developments that add weight to Zuckerberg’s pronouncement, including the addition of VoIP to its Messenger for iOS application and its iOS mobile application, for users in North America only.

Unlike the providers of other over-the-top communications services, Facebook has so far been willing and able to maintain what appears to be a good working relationship with its mobile operator partners, and its latest partnership announcement is testament to that. However, it’s possible that Facebook’s relationship with mobile operators will be tested by the addition of VoIP to its iOS applications, which may be one reason why the company has only rolled out the capability in North America.

Informa Telecoms & Media believes that Facebook could generate about US$1 billion in revenues from mobile advertising in 2013, or about 10% of total global mobile advertising revenues of US$12.8 billion in 2013. Facebook itself reported that its revenue from mobile advertising represented about 23% of its total advertising revenue of US$1.33 billion in 4Q12, or US$305 million. The social network had 680 million monthly active users (MAUs) on mobile in 4Q12, representing 64.4% of the company’s total MAUs of 1.1 billion. Facebook also stated that it had 157 million mobile-only MAUs in 4Q12 (14.9% of total MAUs).