Last May, Facebook's mobile strategy was seen as a major chink in the armor of the social networking giant. Before launching its IPO, the company disclosed in its SEC filing that it was facing challenges in shifting its ad sales to mobile platforms, one of several uncertainties noted by analysts that caused investors to respond negatively. The firm's stock barely rose above its opening price of $38 on the first day of trading, despite Facebook's $16 billion valuation.
Since then, the outlook for Facebook's mobile efforts has changed: After retooling its strategy and revamping its apps for better responsiveness, the company garnered 23 percent of its fourth quarter ad revenue from users on smartphones and tablets: a total of $306 million, up from 14 percent of sales in the third quarter.
Facebook is one of many companies aggressively pursuing a mobile strategy. Social game maker Zynga, for example, is focusing on mobile platforms as one way to reduce its reliance on Facebook for distribution of the company's games. And Google has integrated mobile dashboard management tools into its AdWords program. But it's not just technology companies that need to join the mobile race, say experts at Wharton: All consumer-facing firms will have to consider the smaller screens on smartphones and tablets as a primary channel in the future.
According to the Pew Research Center's Internet & American Life Project, 85 percent of American adults own a cell phone. Among those, 56 percent access the Internet, 43 percent download apps and 29 percent conduct online banking using their phones. "Mobile is becoming more important as people transition to smartphones as a primary device to get information," says Shawndra Hill, an operations and information management professor at Wharton. "I don't think anyone is doing mobile 100 percent [perfectly], but companies need to invest because customers are going mobile."
For consumer-facing companies such as retailers, restaurants and banks, mobile applications are a requirement to compete, says David Hsu, a management professor at Wharton. "If a company is consumer facing, it has to have mobile as a channel."
The challenge for companies is developing a strategy that takes advantage of the unique characteristics of mobile platforms, such as their portability, Internet connectivity and GPS capabilities, and providing a consistent experience across all screens, including the PC. "Everyone knows mobile is increasingly important and that time spent online is continuing to shift [away from PCs], but that doesn't mean the desktop is irrelevant," notes Kendall Whitehouse, technology and media editor at Knowledge@Wharton.
Indeed, popular mobile photo-sharing service Instagram, acquired by Facebook in 2012, just last week announced a new service: Instagram photos viewable on the desktop over the web. In a blog post, co-founder Kevin Systrom noted that while the firm has been focused on "building out a mobile-only experience," in order to make Instagram "even more accessible" the company decided to "expand to the desktop web."
Andrea Matwyshyn, a legal studies and business ethics professor at Wharton, agrees companies need to "create a continuous user experience" between screens. The problem: "There is no blueprint yet. Mobile strategies are often industry driven and company specific."
SCRATCHING THE SURFACE
According to Wharton marketing professor Pinar Yildirim, regardless of industry, all companies need to take certain steps to ensure a sound mobile strategy. The first is to design a user-friendly application. "Some mobile designs can be very [user] unfriendly and jammed," she says. "Firms should understand how consumers use their mobile site and develop [their platform] accordingly."
Along those lines, companies need to decide which operating system, or systems, to design their applications for, and remain aware of the limitations in screen size and processing power on mobile gadgets versus on PCs. When possible, applications should also engage consumers' penchant for search and incorporate location-based results that use a smartphone's GPS signal, Yildirim adds.
Nuts and bolts aside, one of the biggest hurdles for any mobile strategy is defining success, which can vary by company, say experts at Wharton. Services such as Twitter, Facebook and Google will ultimately aim to monetize advertising. A bank would consider customer engagement and retention as a win. Retailers want to drive sales through their apps. And a company such as Starbucks might aim to increase transaction speeds and move lines faster using mobile apps.