How Can Facebook Solve its Main Problem – Monetizing its Mobile Users?

Despite the growing number of Facebook users that access the social networking platform through mobile phones – over 500 million people visit Facebook from a mobile device each month – Facebook still struggles to monetize its mobile users. Due to the uncertainty, many investors are still skeptic of Facebook’s future and with its unclear pathway to growth, it is hard to find any positives for this company as an investment.

It didn’t help that Facebook admitted shortly before its IPO that it wasn’t making any money on mobile advertising even as its users increasingly access the service from their smartphones and tablets and Facebook mobile ads are clicked 13 times more than its desktop ads.

To solve the problem, they’ve encouraged the use of Sponsored Stories and aim to make its key business model to make social work on mobile. Its acquisition of the popular mobile photo-sharing platform, Instagram, will eventually become helpful to drive desktop interaction through mobile content thus making more opportunity for Facebook to serve ads.

The opportunity for Facebook to monetize its mobile users has been limited until the release of iPhone 5. With the new iPhone, companies such as Facebook will be able to keep its formatting and the size of the display, but also add either additional ads or make ads larger– hence, creating more revenue per user.

Seeking Alpha explains that “So indirectly, Apple may have just given Facebook a clear cut path to monetizing mobile, especially since Zuckerberg has already said that the new mobile ads have been more effective in their early stages”.

In what ways do you think Facebook could monetize its mobile users without being annoying or too aggressive?

Image: [TechCrunch]