Earlier this month, Facebook filed IPO paperwork with the Securities and Exchange Commission, indicating plans to raise $5 billion. Recent trading of Facebook stock on private exchanges points to a valuation of more than $80 billion; last year, the firm reported revenues of $3.7 billion, driven by online advertising and sales of virtual goods. But the social network admits mobile monetization has escaped its grasp: "We currently do not show ads or directly generate any meaningful revenue from users accessing Facebook through our mobile products," Facebook wrote in its IPO filing. "We are devoting substantial resources to developing engaging mobile products and experiences for a wide range of platforms, including smartphones and feature phones. In addition, we are working across the mobile industry with operators, hardware manufacturers, operating system providers, and developers to improve the Facebook experience on mobile devices and make Facebook available to more people around the world."
Facebook mobile monetization doesn't seem like an "if it happens" proposition--just "when it happens." Speaking last week at the Inside Social Apps conference in San Francisco, Facebook director of product management Carl Sjogreen revealed that among the 425 million users who access the site via mobile each month, 60 million engage with third-party mobile applications, doing so an average of five times per month. That's 320 million total mobile app sessions every 30 days. "We want every app to be integrated with Facebook," Sjogreen said, according to Inside Facebook. "For some apps it makes total sense to be native apps. For others it makes sense to be cross-platform with HTML5. To us, we don't really care. We want to help them all be better through integration with Open Graph."
The social graph is what separates Facebook from rival platforms, of course. "You see some activity about apps your friends are using and click through," Sjogreen said. "On mobile we have some push notifications for invitation requests. And there's bookmarks. Bookmarks don't feel that sexy, they've been around long time, but they're an important re-engagement factor. Millions of people go to the Facebook app first thing every day. With bookmarks down the side, it's a way for applications to re-engage after they've been installed. When you navigate from profile to News Feed and see those bookmarks, it's a powerful reminder."
It seems like Facebook has it all figured out--except the monetization angle, that is. But it looks like Facebook has plans for that, too. Last week, The Financial Times reported Facebook is poised to roll out a mobile advertising platform early next month, pitching ad agencies on what it calls "featured stories"--i.e., promotions inserted into user news feeds. Perhaps even more important, Facebook has signed an agreement with mobile payment and analytics firm Bango--specifics are unknown, but multiple outlets report the deal heralds the imminent introduction of in-app payment services and operator billing options. Bango supplies white-label billing and analytics services for partners including Research In Motion's (NASDAQ:RIMM) BlackBerry App World, EA Mobile and Gameloft; last year, the firm also inked a deal with Amazon.com, fueling speculation the digital retailer will lean on Bango to bring new payment options to its Appstore for Android and Kindle Fire tablet.
In-app payments are a natural fit for Facebook. Virtual goods purchased within mobile applications are on pace to generate revenues of $1 billion in 2012, quintupling in size over 2011 totals, according to a forecast issued last month by market intelligence firm Strategy Analytics. A separate study issued by mobile app analytics firm Localytics reveals loyal users make 25 percent more in-app purchases over their lifetime as a customer--and few user demographics are more loyal than the Facebook faithful. Not only do in-app mobile purchases make perfect sense for Facebook, but so does carrier billing: "Many people with mobile devices in emerging markets are not going to have credit cards or bank accounts," Enders Analysis head of Internet Ian Maude tells The Financial Times. "A lot of people in those markets will only access Facebook via mobile devices and the only way they can transact online is through something like Bango, where you can charge it back to the mobile operator." It may not compare to the $5 billion Facebook's IPO will bring, but it looks like Facebook's developer partners are in for a windfall of their own. --Jason