For Facebook Inc., the No. 1 challenge is making money from mobile devices. And it's warning investors that so far its ad business is not keeping up with the shift to mobile devices, a crucial point as Facebook heads into the last stretch before its initial public stock offering.
The Menlo Park, Calif., company's executives have been fielding questions about its mobile advertising strategy during the roadshow this week. Facebook flagged the potential slowdown in advertising growth in its latest filing with the Securities and Exchange Commission.
More people are accessing Facebook from mobile devices, on which Facebook is showing them fewer ads. Facebook said it began showing mobile users "sponsored stories" ads in their news feed in March, but has limited the number of ads users see.
"We believe this increased usage of Facebook on mobile devices has contributed to the recent trend of our daily active users increasing more rapidly than the increase in the number of ads delivered. If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected," Facebook said.
The average time people spent on Facebook on their smartphones jumped to seven hours and 21 minutes in March compared with 6 hours and 31 minutes on personal computers, according to new research from ComScore Inc.