Facebook IPO: the Mobile Story revealed in S-1 Filing

Since the Facebook IPO is all over the news we thought we’d examine the
facet of the story that interests us the most – the mobile story and
what was revealed in their S-1 filing.

Background and Context

A few months ago we looked at a snapshot of Facebook’s sharing data on
mobile
 and found that 57% of all sharing was through the mobile web,
with all apps on all platforms combined – iPhone, Android and Blackberry
– contributing 40%.

facebook-mobile-posting-traffic

Combine that data snapshot with ongoing rumors of a full HTML-5 version
of Facebook, fit for the mobile web and codenamed Project Spartan,
and we can start to see the macro trend of Facebook’s business and users
is to embrace the mobile web as essential.

Mobile Summary of S-1 Filing

In Facebook’s S-1 Filing, we saw more details on mobile usage, growth
and revenues that caught our eyes.

(The S-1 is a form companies use to describe their business when they go
public. Here’s more background on S-1 filings.)

And a few of the mobile details that stood out in the coverage:

  • Facebook reports 845 million Monthly Active Users (MAUs)
  • 57% of monthly active users visit Facebook every day and are
    classified as Daily Active Users (DAUs)
  • 425 million of those monthly active users (~50%) used Facebook
    mobile products in December, 2011
  • Facebook does not serve advertising on its mobile experience so
    increased mobile usage actually hurts their revenues
  • Facebook are nervous about mobile because “user growth and
    engagement on mobile devices depend upon effective operation with
    mobile operating systems, networks, and standards that we do not
    control”

As covered by ReadWriteWeb in Facebook’s Biggest Risks Explained,
quoting Antone Johnson in point form:

“No revenue currently generated from mobile advertising; unclear how
much mobile use could be monetized; failure to solve this puzzle
combined with a dramatic shift toward mobile usage could be a serious
problem for FB; and per the next risk factor, they don’t control the
iOS and Android platforms.”

So mobile presents a paradox for Facebook: huge growth, no current
revenues.

Mobile is how their users are increasingly choosing to access Facebook
but they haven’t figured out how to insert their key revenue driver
– advertising – into the experience.

Mobile: Engine of International Growth

Reading the Facebook S-1 and knowing a lot about international mobile
traffic, we can see that a heavyweight driver of Facebook growth around
the world is the mobile web.

From the Facebook S-1:

There are more than two billion global Internet users, according to an
industry source, and we aim to connect all of them. We have achieved
varying levels of penetration within the population of Internet users
in different countries. For example, in countries such as Chile,
Turkey, and Venezuela we estimate that we have penetration rates of
greater than 80% of Internet users; in countries such as the United
Kingdom and the United States we estimate that we have penetration
rates of approximately 60%; Increased mobile usage was a key
contributor to this growth. DAUs as a percentage of MAUs increased
from 54% in December 2010 to 57% in December 2011.

And as move towards 2014, the year when mobile becomes the #1 way to
access the web
, mobile will increase its importance as the engine for
international growth of online businesses.

Reading into the numbers, it’s apparent that Facebook see the popularity
of the mobile web today and also a dominant future for the mobile web
around the globe.

So it will be interesting to watch their evolution as a public company,
as they are required to share more information publicly.

If early indications are accurate, mobile apps will be part to their
mobile strategy and the mobile web will be essential.

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