Recent ad spending has taken a dip for the social networking behemoth, resulting in a Q1 sales decline of 6% from last year’s December quarter.
A regulatory filing made by the company originally blamed the downturn on seasonal ad spending fluctuations, but a recent amendment revealed a deficiency in the company’s mobile monetization strategy.
“If users increasingly access Facebook via mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users… our financial performance and ability to grow revenue would be negatively affected,” reads the amendment.
Basically, more and more Facebook users are opting to access the site via their smartphones, rather than computers, thus bypassing the ads altogether. With advertising accounting for more than 80% of the company’s profits last year, it could pose a major concern for investors if the newly public company fails to develop a winning strategy to combat this issue by next quarter.
It’s bizarre that Facebook is only addressing this issue now. Wouldn’t it have made more sense to develop a plan to leverage advertising for mobile before going public?