Will Bango help Facebook monetize its 60 million-plus mobile app users?
Facebook reportedly revealed this week that more than 60 million users have engaged with third-party apps via its mobile Web site or native apps that integrate with the Bango service. With its mobile use growing, monetizing mobile is crucial for the company if it wants to continue driving overall revenue growth, and a new agreement with Bango for payment services could be one way the company is looking to do so.
“Facebook does not currently display ads to the estimated 350 million users who access Facebook via their mobile phones and must find a way to monetize this traffic, especially as the hardball post-IPO era looms,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston.
“By allowing users to pay for things via the carrier bill they get every month, Facebook can reduce friction and try to increase mobile commerce transactions that occur within Facebook,” he said.
The social network reportedly said this week that its average number of monthly app engagements is approximately 320 million.
In Facebook’s recently filed initial public offering, the company said that it currently does not make any money from mobile. It could be looking to introduce mobile billing as a way to monetize its mobile users.
Carrier billing via the Bango agreement could facilitate in-app purchases by enabling users to have costs billed directly to their mobile phone bill.
While Facebook does offer Facebook Credits as a way to enable purchases, there is limited appeal for this method of payment.
“The use of virtual currency or credits is something that gamers and others might find appealing, but the vast majority do not,” Mr. Kerr said. “Few want to use ‘arcade or amusement park tokens’ in the real world and PayPal, Square and others are supplying fast, efficient ways to pay for real goods via mobile devices, using real currency.
“Bango is a necessary alternative to Facebook Credits and a solution likely far more appealing to far more people,” he said.
Bango also signed a deal with Amazon in December to provide payment services.
There are also rumors that Facebook will introduce mobile advertising next month as it looks to monetize mobile.
However, the agreement with Bango suggest Facebook might also be looking to help retailers drive transactions via the social network.
“I think ads are going to be intrusive and unwelcomed in the tight confines of the mobile user interface,” Mr. Kerr said.
“The more-likely scenario is that Facebook will start offering tools to retail brands with Facebook pages to allow them to integrate transactions into the services they offer visitors,” he said.
“While the intent-to-buy on Facebook is currently not as strong as it is for mobile Web site traffic, this might start to shift if Facebook can offer integrated tools like Bango, to allow brands to tap into the massive volume of un-monetized mobile traffic.”
The Bango deal also presents an opportunity for Facebook users to make transactions in real-time versus having to load up on credits.
The deal with Bango could enable Facebook to take advantage of its social networking capabilities to provide personalized product recommendations without the need to build a robust payments solution.
“When Actions tell you what your friends are listening to, and you can purchase with a single button-push, then your friend’s influence rules and Facebook gets credit as the store that sells to 800 million users,” said Michael Stricker, search engine optimization and social media strategist at WebiMax, Mount Laurel, NJ. “This also saves Facebook having to build out or accommodate security, SSL, handling credit card info, etc.”
Chantal Tode is associate editor on Mobile Commerce Daily, New York