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Facebook says mobile ads successful, but analysts say challenges remain

Cameron Scott | July 27, 2012
Facebook seemed to answer at least one burning question about its mobile business on Thursday

Facebook won't be able to bet on Sponsored Stories as its main mobile advertising offering for long, said analysts interviewed before the company's earnings were released. With the mobile advertising market likely poised to enter a period of dramatic innovation, the company will have to invest in improvements to its mobile platform that keep users engaged and enable more sophisticated forms of marketing, the analysts said.

"I think Facebook is going to have to find a different way to monetize mobile that isn't about little display ads," said Melissa Parrish, an analyst at Forrester Research, referring to Sponsored Stories.

Chris Silva, of Altimeter Group, called Sponsored Stories "blunt instruments."

"Facebook is leading now for lack of anybody coming along and innovating," he said.

Facebook will likely need to undertake substantial improvements to its mobile platform, analysts said. It has yet to introduce location-specific advertising, they noted. And it will need to support on its mobile platform interactive "rich media" advertising, which advertising insiders say appears to be most effective for marketers. Facebook will also need to make better use of its user data to target ads to users who are most likely to be interested in what they promote, the analysts said.

 

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