May 10 - Facebook warns investors mobile devices are bigger risks than originally projected. The solution may be better apps or sponsored Facebook groups. Carmen Roberts reports.
Facebook warns investors that mobile users may hurt revenue. Just days before the widely anticipated initial public offering, Facebook amended its regulatory filing to say mobile devices are a bigger risk than originally projected. The problem: mobile users are increasing faster than Facebook can deliver mobile ads. Scott Stein, Senior Editor, CNET: SCOTT STEIN, SENIOR EDITOR, CNET (ENGLISH) SAYING: "Facebook is a free service so the amount of money they earn from advertising has been what's kept them profitable. And the problem with mobile advertising is it's a different beast." On a computer, Facebook has room to show about five ads on a sidebar. But a mobile device is much smaller, so ads must be inserted into the news feed. It's a delicate balancing act. Too many ads may drive mobile users away. Too few will drive revenue down. SCOTT STEIN, SENIOR EDITOR, CNET (ENGLISH) SAYING: "It may have to do with finding a way to sponsor different groups that people like or coming up with solutions." Figuring out how to make money from mobile advertising is important to this mega social networking site, especially after it said first quarter revenue was six percent lower than the previous quarter. SCOTT STEIN, SENIOR EDITOR, CNET (ENGLISH) SAYING: "When it comes to the mobile area you see apps and maybe freemium apps, and that's become the story of where a lot of people have earned their money. Would it mean at some point Facebook would have to come up with some mobile subscription service or who knows what? They've not discussed any of that." People in the U.S. are now accessing Facebook more through mobile devices than on computers. comScore says the average time was 441 minutes in March compared to 391 on PCs and laptops. With so much at stake, analysts say Facebook is sure to come up with a plan, but the question is whether that plan will come before its new investors run out of patience. Carmen Roberts. Reuters