Mobile is eating Chinese Facebook’s lunch, too

Facebook is not the only online service whose business model is threatened by its own growing mobile success. Renren, the Chinese social network often compared with Mark Zuckerberg’s site, just reported exactly the same risk.

“Brand advertising remained challenging, due to macro conditions, increased competition and the continued migration of our user traffic from PC to mobile,” CEO Joseph Chen said whilst announcing Q2 results.

Renren, which is listed in New York and is China’s top real-name social network service, reported quarterly ad revenue fell by more than a tenth compared with last year, to just $15.1 million – despite total active user numbers growing by almost a third to 162 million.

“Looking ahead, our strategy remains focused on mobile opportunities, with increasing effort to experiment different monetization models, including mobile gaming, mobile advertising and mobile commerce,” Chen pledged.

Observers should not focus solely on the advertising component. Renren has joined fellow Chinese digital media services in reporting a worsening national economy as well as a slow-down in the country’s broadband adoption.

Against that backdrop, however, mobile adoption – which is still surging – may pose a risk.

Facebook’s stock market IPO filings warned investors that its growing popularity on smartphones, especially in emerging markets, risked its business because it does not have a fully-fledged mobile business model.

Renren’s Q2 gross profit grew 13.9 percent to $27.9 million thanks to its online game revenue growing 122 percent to $22.5 million.