When Facebook was first listed on the stock exchange in 2012, investors were concerned. Had the company missed the mobile wave? 5 years after the launch of the iPhone, most of Facebook’s revenues still came from desktop. Zuckerberg’s team recovered. Today mobile already represents 60% of revenues, and Facebook is about to double down. Apps will become a central part of the social network’s monetisation of mobile. Stijn Schuermans shines a light on Facebook’s new mobile developer strategy.
Two years ago we wrote that Facebook was a prime candidate to become the leader of the mobile web; the one who would take care of the missing platform ingredients (reach, discovery, monetization). It should come as no surprise then that over the past year Facebook has shown a renewed focus on helping developers to build – grow – monetize their apps across all mobile platforms. Zuckerberg himself called it the cross-platform platform in his keynote speech on f8. We couldn’t have said it better ourselves.
The mobile platforms of Apple and Google became so successful because of the large amount of apps that they drew in. For developers, however, this meant heavy competition, few opportunities to stick out and a difficult environment to build a business on. [tweetable]Facebook now positions itself as the developer’s partner that helps to de-commoditize apps.[/tweetable] Facebook can lure mobile apps to its own camp by enabling developers to compete better. Apps will depend on Android and iOS to become available on the majority of handsets, and on Facebook to reach users, get discovered and make money.
Three aspects of Facebook’s strategy warrant a closer look.
Facebook builds a Mega-SDK
Facebook knows developers very well – hacker culture is deeply embedded in the company’s DNA. [tweetable]Facebook is now extending that developer DNA beyond company boundaries[/tweetable], just like Amazon has expanded its cloud operations DNA outside of the company by commercializing its Amazon Web Services (AWS). “Unlike their past developer efforts, which were all about pulling content onto Facebook, this year was about pushing Facebook’s infrastructure out into all kinds of mobile apps”, as Ben Thompson put it. It is a very natural way to empathise and connect with the developers who will build complements to Facebook and Amazon’s core businesses.
How is Facebook going to entice mobile developers? By building one of the first true Mega SDKs. [tweetable]As we predicted last July, Facebook’s Mega SDK will be built around app marketing services[/tweetable]:
analytics (relevant acquisitions include Parse, Monoidics, Little Eye Labs, Airlock)
promotion (more than 350 million app downloads through mobile app ads to date)
re-engagement (Engagement Ads were announced at f8)
monetization (the new Audience Network)
Half a dozen acquisitions in the past year, new products and a new developer incentive program (FbStart) all say that mobile developers are becoming incredibly important to Facebook. Although we have to stay careful of course: Mike Mace correctly points out that Facebook in the past has shown predatory behavior (incorporating 3rd party apps into the core product) and neglect for developers.
Digital identity is Facebook’s essence
Facebook’s new anonymous login and privacy features are not just about soothing the privacy pundits and the company’s most vocal users. They point to a deeper reality: digital identity is at the core of everything Facebook does.
[tweetable]Facebooks needs developers to make the Facebook digital identity ubiquitous across web and mobile[/tweetable]. The social network giant does that by reducing sign-up friction on the user side (hopefully also making developers more comfortable with integrating Facebook login). Social login was also a main feature of Parse. Several other highlights at the f8 conference (Send to Mobile, the mobile Like button, even Applinks) make most sense when viewing them as ways to increase the value of a Facebook login relative to a proprietary identity, another social login provider, or no identity at all.
[tweetable]Why this focus on identity? Because it’s crucial for Facebook’s survival[/tweetable]. A study from early 2014 claims that Facebook is about to lose 80% of its users, drawing a parallel with infectious diseases that spread, then flare out. Whether or not that comparison holds water, identity is a powerful antidote to this scenario. If users don’t just use Facebook as their social network, but also to access scores of unrelated services, then it will be hard for users to drop Facebook entirely. The company will still have to work hard to keep users active and engaged, but it will have an opportunity to try.
And, not to forget, Facebook gains a treasure trove of user behavior data that will reach far beyond its own services.
It was no accident that identity was the first item on the “cross-platform platform” list in the graph above, before social. On the web, Facebook also accounts for more than half of all social logins. It fully intends to achieve the same in mobile. The company’s future depends on it.
Facebook wants to become “Google for mobile”
Facebook and Google are mortal enemies, because they have the exact same business model.
Create value for users by developing a score of valuable services (most of them free to use), and enlist developers to create thousands more.
Deliver that value across all digital devices; on the web and on mobile.
Capture value by selling user reach, engagement and hyper-targeting to advertisers.
It is no wonder then that there are many similarities between both companies. Facebook is taking that similarity to the next level with its new products.
The Audience Network is the AdMob of Facebook. It aims to become the key competitor for Google in mobile advertising.
But the boldest move is Applinks. [tweetable]In the most optimistic case, Applinks will allow Facebook to build the PageRank of mobile[/tweetable], a head-on attack on its arch rival. (Facebook has already kindly offered to host an index of all applinks.) At worst, Applinks can substantially boost Facebook’s app install business (CPI) through affiliate marketing schemes, earning revenue on each referral. That supports the Mega SDK for developers as well as Facebook’s own income statement.