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I believe the Paper app will hurt Facebook’s mobile revenue..for at least one quarter

There may be some troubling quarters ahead for Facebook. And it’s all due to the new Paper app.   The app itself is a gorgeous combination of Flipboard and fluid design, that’s getting rave reviews from early testers and is poised to push users to more relavant news and less spammy posts from brand.  It’s also ad-free for now.

The issue with the new app is that due to its popularity and engaging nature, it’ll catch on quickly with users especially since one of the options is to allow all push notifications from FB to go directly to paper and bypass the existing FB app, hurting mobile revenue.   As more users start to use Paper over the traditional FB app, the more money FB will lose on getting ads to users within the News Feed.  It may not take them too long to start including ads but the fact that ads aren’t a part of the initial offering is going to hit FB hard very soon.

I love the Paper app and I’m slowly making it my default FB option. However, as someone who’s heavily involved in social media strategy, I like seeing the ads within my News Feed.  I just hope that the ads that eventually come to the News Feed within Paper are more targeted and relevant and don’t ruin the user experience.

I wonder how investors will react to the slow mobile revenues in the future (should it happen) – will they take the Amazon route and believe in FB’s future or hemorrhage the stock due to the dip in mobile revenue?

Download Paper for iOS here

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