Summits Yellow

What’s Facebook’s Game?

David Murphy

Facebook May 2015The rise and rise of Facebook on mobile, in terms of content, advertising, and the sheer amount of time mobile users spend there, has been one of the standout stories of the past couple of years. And it seems the company has no intention of resting on its laurels.

Within the past couple of weeks alone, it has launched Instant Articles, enabling publishers to publish their stories directly into Facebook's iOS app; trialled a search engine enabling Facebook users to find and post links to external websites without leaving Facebook; brought more native ads to the Facebook Audience Network; signed a deal with IBM to open up its ad offering to IBM Cloud clients; and struck a deal with Nokia to integrate Here maps into the mobile web version of Facebook, as well as Instagram and Messenger apps.

So while some of these moves could be seen as Facebook, not surprisingly perhaps, trying to encourage its users to live their entire digital lives within Facebook, there are also examples here of Facebook collaborating with other companies. So we reached out to a few trusted industry contacts to see what they made of Facebook’s recent moves…

David BarkerDavid Barker, SVP and managing director, EMEA Advertising Solutions, Amobee:
Facebook is building the most advanced online platform in the world. By constantly bringing new features into its platform, Facebook is trying to move away from being strictly seen as a social network to being perceived as a place where users can live their whole digital lives.

With users spending an increasing amount of time on Facebook, due to the additional things they can do without leaving the platform, brands’ interest in having presence in the platform is increasing too. Obviously, Facebook sees this as a major stream of revenue and therefore this links to what I think is Facebook’s second strategic focus.

This is Facebook working towards being to display/native advertising what Google is to search; in other words, developing a highly sophisticated digital ad network. Although Facebook already has a great amount of data and resources to deliver highly targeted ads, partnering with other companies allows them to do three things.

Firstly, they can reduce the resource and financial investment required for the development of any new product, which means they can continue focusing on developing new products that no other companies own or products they believe no other company does well enough.

Secondly, they can respond more quickly to the market’s needs. By partnering with other companies, they don’t have to develop a product from scratch, just tweak it if necessary.

Thirdly, the partnerships give Facebook access to data and functionalities that complements the data they already own and will help them deliver better ads, which in turn will further increase brands’ interest in advertising on Facebook. To take two examples, the partnership with Nokia Here (Maps) can help deliver more accurate geo-located ads, while the IBM partnership will largely increase Facebook’s data analytics capabilities.

Additionally, partnering with big players such as Nokia and IBM also helps Facebook further differentiate itself as one of the market leaders, while at the same time increasing the barrier to entry for any new/small players that may attempt to enter the advertising market with fewer resources.

James Lamberti, vice president & global GM, AdTruth:
Facebook’s strategy is about data, data, and more data! The more Facebook does to keep users in its environment, the more data it can collect, leverage, and monetize. If I were to take a guess at Facebook’s next major move, I would say it’s a massive global consumer segmentation that leverages all this data, connects it to its multi-screen identity key (i.e. The Facebook ID), and then executes with a full stack ad platform to become the world’s hub for mobile advertising. This reality, which is very close at hand, will put Google in a very difficult place, and most other publishers will have almost no way to compete with Facebook's mobile advertising hegemony.

Shazam Miles LewisMiles Lewis, senior vice president, international advertising sales, Shazam:
Facebook’s strategy is simple: the pace of change around the world of communications continues to accelerate. With every development it announces, it shows as far as possible that a startup culture remains - that is, Facebook continues to iterate, to create and to innovate. If projects fail that is fine. In fact if the floor isn't littered with hacks that have failed that is seen as bad. Keep going. Keep trying.

It's less about wanting to have users live their entire lives on Facebook, it's more about the need to stay relevant and central in this fast-paced business. As a parting point on this, I find it fascinating that on the back of the Facebook sign at its Menlo Park HQ it still has Sun Microsystems in place. A reminder to every employee every day that it can all change very quickly?

Patty Nunez, digital strategy and transformation, Bupa:
As happens with most industries, value is moving up the stack. Facebook has shifted its focus from its core offering to focus on differentiation. Like other big tech players, it understands the value is in creating better customer experiences and that the easiest way to do this is by keeping as much of the experience within its own platform.

Theo TheodorouTheo Theodorou, head of EMEA, xAd:
The recent announcements from Facebook show that the social media platform is evolving its offer to compete with juggernauts like Google, Amazon, Apple and Microsoft. Facebook is using a number of tactics to increase its platform stickiness with consumers and gather more audience data. What’s really interesting is how it is realising the potential of location data. The recent deal with Nokia to integrate Here Maps is indicative of this major trend towards the prioritisation of location data among brands and media planners.

Ultimately, location is becoming one of the fastest growing areas in mobile and the Nokia deal is validation of that. At xAd, we place a very high importance on this verification of location signals, which allows a brand to engage with their audience at the right place and at the right time - we are looking forward to what the future holds for this space.

Stephen Jenkins, vice president, global marketing & communications, Millennial Media:
The fact that mobile is so central to Facebook’s business strategy demonstrates how important mobile has become to engaging target audiences across the world. However, this new strategy also seeks to encourage users to live their entire digital lives within Facebook, which is arguably a similar strategy to Google.

At Millennial Media, we believe open is better. Whilst Facebook’s reach is vast, the time consumers spend in app and on the mobile web outside of that environment cannot be discounted. We know that both advertisers and publishers want this to be a thriving, diverse, open ecosystem; one that enables publishers, developers and advertisers to build their own business models that suit their needs.

Fiksu Kathy PattisonKathy Pattison, SVP, marketing, Fiksu:
Overall, Facebook’s strategy at play through these recent moves and more is to subsume the internet – and they’re making a damn good job of it! Facebook continues to set the high water mark, with mobile at the forefront of its strategy.

Bringing more native ads to the Facebook Audience Network (FAN) is another strong move from Facebook’s current position of power. Fiksu was a beta partner for FAN and we’re steeped in data showing just how well FAN performs. Our research mirrors what Facebook’s Jenny Abrahamson said: “Integrated ads outperform: an ad that is well integrated within the app design and naturally fits into the user flow has a much better opportunity of catching a user’s attention and ultimately leads to higher conversion rates.”

However, the increase in the use and effectiveness of native formats is not unique to Facebook. As a demand side platform with access to the broad mobile ecosystem, Fiksu has a unique vantage point at the forefront of what’s happening, and we are seeing this adoption of native across all channels including Google, Twitter, Yahoo and the RTB exchanges.

The IBM deal demonstrates Facebook strategic direction to unify its offering into a wider enterprise marketing cloud. This omnichannel integration is the future for marketers’ mastery of the entire customer journey, and is the impetus behind our own partnership with Adobe.

This and the other partnerships show Facebook’s willingness to make strategic alliances where it makes sense for the company. No marketer wants to put all of their eggs in one basket – even when it’s a really good basket – without having a watchful eye on the hen house.