Why Facebook Is Focused On Ad Serving Instead Of Gaming Revenue Right Now



Facebook is perfecting the onsite, mobile experience first.

Notice those pesky ads on Facebook when you haven’t signed in and are about to login? That’s because Facebook is going heavy on advertising.  Facebook is shifting from chasing revenue via games like “Farmville” and “Words With Friends” and is focusing on the social media ecosystem they control as well as take full profits from.  Zynga was a great partner for Facebook in the last few years but the gaming-centric social media play hasn’t faired well with users who complained about annoying notifications from friends.

Have you seen the ads in your newsfeed for products as soon as you login?  That’s because Facebook is upping the ante when it comes to ad serving directly to users once they are logged in.  The total number of ads may not have changed much but the user experience has significantly changed now that the first thing a user sees is an advertisement, NOT an update from a friend.  In Facebook’s pursuit of profit as a public enterprise, it’s expected that the company would move into the marketing and advertising game with full speed.  What’s not expected is a drop-off in engagement or monthly active users, time on site and overall engagement if these attempts are unsuccessful.

This doesn’t mean Facebook is abandoning games.  Here are some quick stats from Facebook about gaming:

  • 250 million monthly active users play games
  • Game installs up 75 percent from the prior year (March 2012)
  • Facebook paid more than $2 billion to developers last year.

It does mean social media gaming has changed and Facebook is beholden to their shareholders now.  If Zynga was bringing in the lion’s share of revenue, one would see more gaming partnerships instead of less.   Facebook recently purchased ad-serving technology from Microsoft (see Reasons Why Facebook Buying Microsoft’s Atlas Is A Brilliant Move here).  This is more evidence that Facebook is trying to monetize via advertising and is focusing less on games right now.  It’s another good move by Facebook execs to monetize mobile and the desktop.   Perhaps later they may focus again on more engagement via gaming but Zynga’s current stock price that is below the recent IPO isn’t a strong reason to change course any time soon.  The latest additions of the changing Timeline and the introduction of Graph Search show Facebook wants a better experience onsite/mobile first.

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