Thought of the Day: Facebook has a business model. Why you should care.

I’m not sure how it happened but I’ve become a mini-financial advisor for several of my Phamily members. As a result, I’ve been thinking a lot about Facebook’s latest stock surge which is more or less a direct result of their latest earnings report.

I won’t bore you with the stats but here’s my key takeaway:

41% of Facebook’s revenue came from mobile…and that number is climbing. Despite the fact that I routinely get dating ads for “Biker Chicks”, the ad model appears to be working. More importantly, the business model appears to be working.

I’ve come to realize that this has major implications, not just from an investor’s point of view, but also from a business,consumer, and advertiser’s point of view. Between Google and Facebook, they account for 70% of all mobile ad revenues. Estimates are that in 2013, Google will rake in $8B (double that of 2011) and Facebook will take in $2B in mobile ad revenue.

Two years ago FB had ZERO mobile ad revenue.

Businesses need to start planning their mobile strategy immediately…or not. I guess if you’re lucky you can always sell your dying business to Jeff Bezos.

No one watches commercials. Everyone downloads apps.

Advertisers are willing to pay vast sums of money to get their message out to the masses. However, the problem(s) facing advertisers today is that:

  • DVR killed the commercial.
  • Print advertising is mostly dead.
  • E-mail marketing is effective, but “delivery” is a problem that lives in your basement and won’t leave no matter how nicely you ask.
  • The jury is still out on Facebook and Twitter advertising
  • And then there’s the tried and true Google ad network. But according to a recent Google earnings report, clicks aren’t exactly what they used to be.

One of the biggest problems facing advertisers (and Google) is that user search is trending toward “vertical” search engines. If you want to search for cheap flights, you go to Kayak. If you want to search for “Christopher Columbus” you go to Wikipedia.

Favorite movie actor? IMDB.

Sports scores? ESPN.

Books, bikes, backpacks, clothing, electronics, or toothpaste? Amazon.

Porn? Well then yes, you would probably use Google.

So how do you reach your users when the audience is so fragmented? More importantly, how do you engage your audience? Simple: Apps are the next big media channel for advertisers.

To be continued…

Did you know

In case you’re not subscribed to the Apple iOS developer RSS feed you may not have heard – or were never aware – that 1) Apple allows you to provide “short links” to your apps in the App Store and 2) the base URL for short links is now

To create an App Store Short Link, apply the following rules to your company or app name:

  • Remove all whitespace
  • Convert all characters to lower-case
  • Remove all copyright (©), trademark (™) and registered mark (®) symbols
  • Replace ampersands (“&”) with “and”
  • Remove punctuation
  • Replace accented and other “decorated” characters (ü, å, etc.) with their elemental character (u, a, etc.)