Facebook debuts App Center but Twitter makes the money

Facebook made little secret of its challenges in the mobile market amid the disaster of its IPO, and it has taken the first step to address those, unveiling its mobile App Center. However, as the social networking giant admits it does not know how to monetize its huge mobile traffic - and the Center does not directly help with that - rival Twitter claims it sometimes gets more advertising revenue on smartphones than PCs.

The App Center has gone live with more than 600 applications, including Nike+ GPS, Stitcher Radio, Draw Something and Pinterest. At a launch party in San Francisco, the firm's head of developer relations, Douglas Purdy, said: "The App Center represents a new way for users to discover social applications", and allows developers to reach the 900m-strong user base.

The Center represents Facebook's attempt to have greater control over its user base, extending its product into a full software platform which can, it hopes, deliver revenues. Currently, some of those potential mobile profits are going to others - Facebook says it was responsible for 83m visits to the Apple App Store in May alone. And the new center does not, as yet, generate money directly since users are still sent to third party stores for actual purchases. Facebook said it was not yet planning to sell apps or digital content directly to users, and its latest offering is mainly about increasing developer interest and improving the user experience.

Users of the App Center will still end up in third party stores. The storefront is designed to personalize the user's experience based on recommendations and preferences - which are known from his or her Facebook behavior - making it easier for consumers to find products they like. Having selected an app, shoppers will be sent to the App Store or Google Play, depending on the device.

The Center will roll out gradually to US users over the coming weeks, and in future there will be versions for other countries.

Facebook said it relies on a combination of humans and algorithms to choose and approve apps to feature in the Center and every offering is reviewed for technical aspects and functionality. Over time, the process will become more heavily automated.

But the challenge remains of turning all this cleverness into gold, especially as the small screen of a smartphone can display far fewer adverts than a PC display - and users are generally less tolerant of advertising. This is a problem for most mobile web players, but one that Twitter may be addressing better than most. CEO Dick Costolo said this week that the social networking firm now generates larger advertising revenues from its mobile services than the desktop on certain days.

Speaking at The Economist's Ideas Economy: Information event in San Francisco, Costolo said advertising on Twitter was "inherently suited to mobile because tweets are suited for mobile, even though we launched first on the web and only started to run on mobile a few months ago. It's already been the case a couple weeks ago that mobile ad revenue in a day was greater than non-mobile." He did not give figures, but said the majority of active users are on wireless devices. Earlier this year, research firm eMarketer estimated that Twitter will make revenues of $260m in 2012.

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