Facebook Home – The Industry Reacts

Yesterday, Facebook unveiled its latest product, Home – essentially an Android launcher which integrates the social network into the users smartphone.

Weve already had our say on the launch – but what do the experts think?

Advertising

One of the key questions spinning out of the announcement is how Facebook plans to make money out of the app. According to Upstream CEO Marco Veremis, Home wont be directly monetised – at least, not initially:

“Looking at the opportunities for advertisers, the initial version of Facebook Home will not host any ads but the social network has confirmed that advertising will be featured within the Cover Feed in subsequent versions” says Veremis. “Having consumers continually logged into Home will of course mean Facebook can amass greater levels of data, which can then be utilised and shared with third parties to create more relevant and targeted advertising. However, as advertising levels across all digital channels in the West are reaching a point of saturation, Facebook needs to maintain tight control over the frequency and relevance of the advertising so that it doesn’t interrupt the user experience or feel intrusive to consumers.”

Nic Newman, EMEA MD and head of strategy at Tigerspike agrees that introducing advertising to Home could prove very risky.

“Facebook on my home screen? People at the centre of my experience? Does not this not sound a little like Microsofts live tiles on Win8?” he says. “Its not a new idea, but since Facebook doesnt make an OS, this is the next best thing. It allows more tracking and more advertising – the precise thing that, if the balance is wrong, will make it fail. Homescreens are sacred. They are for my most important things – including, of course, my friends – but its certainly not for advertising.”

So why would Facebook want to launch a product it cant monetise through advertising? Jan Dawson, chief telecoms analyst at Ovum, has an answer:

“To users, the sell here will be making it easier to share information, photos and so on with friends,” says Dawson. “But to Facebook, this is about becoming more deeply embedded in the operating system on mobile devices, and creating a broader platform. Since Facebook doesnt make an operating system for mobile devices, this is the next best thing. It will allow Facebook to track more of a users behaviour on devices, and present more opportunities to serve up advertising, which is Facebooks main business model. And that presents the biggest obstacle to success for this experiment: Facebooks objectives and users are once again in conflict. Users dont want more advertising or tracking, and Facebook wants to do more of both.

“This is a great experiment for Facebook – its much lower risk than developing a phone or an operating system of its own, and if it turns out not to be successful, there will be little risk or loss to Facebook. If it does turn out to be successful, Facebook can build on the model further and increase the value provided in the application over time. The biggest challenge will be that it cant replicate this experience on iOS, Windows Phone or BlackBerry, the three other main platforms.”

Out-googling Google

That might not prove a problem, if you believe the view of Victor Basta, managing director of Magister Advisors, that Facebook are trying to out-google Google specifically.

“Facebook is doing to Google exactly what Google did to the Internet, sitting on top of a chaotic system, making it simple and uniform through a proprietary layer, and underpinning this with deep search functionality.  In Facebooks case it happens to be sitting on top of Googles prized Android OS supported by the depth of Graph Search.

“Facebook are clearly hell-bent on breaking Googles hegemony in search through a combination of Graph Search and deeper mobile device integration. Whats interesting and significant about the steps that Facebook are taking with search is that they stem from a behavioural understanding of the user base.”

Sending a message

While its easy to focus on the homescreen, Martijn Lammers, VP product management at Acision, points towards the important of the messaging aspect of the announcement.

“Facebook’s latest mobile play represents one of the more radical tweaks in mobile messaging to come from a major company in years,” says Lammers. “One of the game-changing features of this new app is its ability to receive SMS notifications within Facebook’s Chat Heads functionality, yet another indication that Facebook believes its future lies on the mobile phone rather than the desktop.

“For Facebook, this is a step to owning the smartphone experience of its users, putting messaging at the centre of this. While the app pulls together Facebook mail and chat messages with text messages into a consolidated conversation, such an application does not go the whole way to offering a truly cross-platform messaging service.”

Go hard or go Home?

Theres a lot to chew over – and in our book, thats the sign of a good announcement. Well leave it to Andrew Grill, CEO of social media influence metrics tool Kred, to wrap it all up for now:

“Its a smart move from Facebook and HTC to – a smartphone with Facebook Home built-in, which will appeal to a segment of the market, and even drive new smartphone sales as a result. Equally smart is the Home app for those of us who already have an Android phone,” says Grill. “Getting existing Android users to re-skin their phone will be harder to achieve, and some are seeing this play as a way to get more Facebook ads onto the home screen.

“Facebook themselves identified the risk to revenues in their IPO due to mobile, so this is their big play into mobile advertising. The balancing act for Facebook will be to provide the right level of utility in the Home app, and update it regularly based on user feedback, without destroying the experience with irrelevant and intrusive ads.

At least those of us taking the app route have the choice of going back to the native skin if the Facebook ads get too much. Those who buy the HTC First could be stuck forever with the ads. 

“Facebook’s first attempt at ads on the iPad app has shown that they really don’t get the mobile as an advertising channel, so why would I want to give Facebook complete control of my phone?”

 

Join us at the Mobile Retail Summit, London, 24 April.

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