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Does Facebook have the power to deliver in mobile?

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Lightbox

The Lightbox photo sharing app will be discontinued

In the latest in a series of moves intended to boost its mobile presence, Facebook has acquired Android photo sharing app Lightbox. The move was announced days before the social media giants initial public offering, which is scheduled for tomorrow.

At the same time that Facebook has been underscoring the difficulties it faces in generating revenue from mobile, the social network has also been aggressively building its mobile holdings. The deal for Lightbox is another example of how Facebook is investing heavily in mobile to show investors that it takes its challenges here seriously.

“This acquisition hasnt really been made to help Facebook build good apps, said Maani Safa, innovation director at mobile marketing agency Somo, London.

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In the first instance, Facebook is trying to reassure investors ahead of the IPO, he said. There has been a lot of speculation about how they will monetize mobile, so they have made significant hires in this space.

“Secondly, this just shows that they truly understand the importance of mobile, and that it is the future. These guys have been brought on to help Facebook build its mobile road map, to prove that they have the power to deliver in mobile.

Mobile map
With approximately half of its users accessing Facebook from their mobile devices, Facebook knows it needs to be able to monetize mobile. Currently, the lions share of the social networks revenues from online advertising to the tune of $3.1 billion last year but as users increasingly move to mobile that revenue is expected to decline.

Facebook has made a string of mobile announcements over the past few months.

Late last year, it acquired location-based mobile app Gowalla. This was followed up with the social networks first foray into mobile advertising earlier this year.

Then last month, Facebook acquired iPhone photo sharing app Instagram for $1 billion as well as app Tagtile.

And, last week it introduced the App Center, where consumers will be able to discover and download social apps for their mobile devices.

The Lightbox deal brings Facebook significant additional talent in the mobile field. Thai Tran, one of the founders of Lightbox, spearheaded the creation of Google Maps, per Mr. Safa.

This is real, visionary mobile talent with a proven record of audience generation, as was the case with the acquisition of Gowalla, Mr. Safa said.

The team behind Lightbox will be joining Facebook and the app will be discontinued next month.

Attracting advertisers
Now that it has a significant mobile team working on its behalf, the question will be if Facebook can leverage this talent to deliver mobile experiences that are compelling both for consumers and advertisers.

Attracting mobile advertisers will be key for Facebook, which reports that it is seeing mobile traffic growing faster than it has been able to monetize mobile.

We expect mobile to rival TV over the nextthree to fiveyears in terms of both reach and engagement, and if Facebook wants to win here, which it does, there will be massive upheaval across its offering on this platform in terms of look and feel, Mr. Safa said.

No doubt their highly talented team will play a part in shaping this, he said. Geo-location is far more powerful socially on mobile, and we think they will be taking more advantage of this over the coming months.

The App Center is a key part of Facebooks strategy to monetize mobile.

By only promoting apps that have Facebook single log-in integrated, Facebook will have access to consumer preferences, which is the kind of data advertisers look for when deciding where to place ads.

Dont be fooled, this isnt about revenue share, said Ross Sleight, chief strategy officer at Somo. Facebook is looking way beyond a 30 percent cut from developers.

This is all about advertising and Facebook providing the opportunity for ultra-targeted, ultra relevant ads, he said. It will know what type of apps users like across different platforms and therefore can provide an almost unbeatably effective service for advertisers.

Facebook will make more money from app promotion and advertising, than it ever would through a revenue share. Thats the play, thats the killer.

While social advertising is growing, mobile social advertising is still in the very early stages.

However, with mobile use of social networks growing significantly, mobile social advertising should follow close behind.

Facebook’s insertion of Sponsored Stories into mobile news feeds is an important step in making mobile social advertising more mainstream, said Jed Williams, analyst and program director at BIA/Kelsey, Chantilly, VA.

As the mobile-social market matures, we’ll see more of these native formats re-define the mobile advertising experience, he said. They should integrate more seamlessly with organic content and leverage the deep targeting that mobile devices offers -namely location targeting.

If executed well, we think native ads can create a more compelling, less interruptive brand experience and provide an important step forward for mobile-social advertising.