Facebook plans to raise $10.6 billion in the largest ever Silicon Valley initial public offering (IPO), which is scheduled for May 17.  Going public means many changes for any company, and Facebook has spent the last few months preparing for this moment after years of avoiding IPO and acquisition talks.

As part of Facebook’s pre-IPO road show, CEO Mark Zuckerberg, along with COO Sheryl Sandberg and CFO David Ebersman, met with potential shareholders and investors about their mobile and social plans.  Zuckerberg during a meeting in Palo Alto last week, discussed the company’s mobile strategy in particular.

Facebook users are increasingly and consistently accessing the social network via their smartphones, a trend that Facebook hope to capitalize through advertising as it prepares for its IPO.

“Growth in use of Facebook through our mobile products, where our ability to monetize is unproven, as a substitute for use on personal computers may negatively affect our revenue and financial results,” Facebook notes in its IPO filings.

Mobile is a top priority

In the last few months Facebook has been busy making quite a few acquisitions. Facebook’s purchase of Instagram surprised many, considering its $1 billion price tag. Mark Zuckerberg made it clear that this was a timely purchase, as it directly fits into the company mobile strategy.

Facebook anticipates that mobile devices are the future, especially applications that focus on HTML5.  Connecting users around their mobile activity is another trend Facebook will likely monetize through brand marketing, as it’s done online with Spotify and other companies that were quick to support the newer Timeline.

“Over the next 10 years or so, every consumer category should be transformed to be built around people,” Zuckerberg told fund managers. “People will listen to music and watch TV with other people through Facebook.”

Mobile growth has exceeded 10 times the reach of the PC web, in just a third of the time. Facebook will need to adopt new advertising and marketing plans to master the platform.

“Mobile growth has set a new precedent as the first truly global platform—obtaining 10 times the reach of the PC Web in one third of the time. Today’s consumer demands a richer experience on both their smartphone and tablet device. In fact, people worldwide are now spending more time on their mobile devices than watching TV.

“In the U.S., people are spending about 142 minutes a day on their devices, compared to 135 minutes for TV and 96 minutes on PCs, making mobile the primary media consumption channel in the nation, yet mobile ad spend has not increased at a proportionate rate. The reason behind this is that the new mobile paradigm requires a completely new way of thinking, a new set of rules and standards and a fundamentally different strategy,” said Anne Frisbie, VP and MD, North America, InMobi.

Mobile Facebook users spend way more time with the mobile site than on the desktop. That means that Facebook is losing money, since it doesn’t run its display ads on its mobile site.  And Instagram has succeeded in a field in which Facebook still somewhat clumsy, though Instagram, too, has yet to fully monetize its mobile presence.

Facebook also collects personal more data including user’s location, which would help the company to offer more relevant mobile ads.

“We know Facebook has an awful lot of data, but what they have not worked out yet is the most effective means of using that data for advertising,” said Catherine Tucker, a professor of marketing at the Sloan School of Management at the Massachusetts Institute of Technology. “They are going to have to experiment a lot more.”

Facebook may be opting to go into the smartphone market on its own, as rumors rise around the social network building a smartphone with HTC.  One benefit of Facebook launching its own device is the expanded possibilities of direct access to its ecosystem, which Facebook is already improving.

Mobile Apps Ecosystem

Considering over 488 million users are accessing Facebook on their mobile device, any improvement made in mobile ecosystem will have a great impact on the future of Facebook’s mobile strategy.

“Look, whom Facebook is competing – with Google, Apple, Microsoft and the like. You must have a strong brand and a strong user platform,” says Gartner analyst Brian Blau.

As a part of its goals to monetize a mobile ad network, Facebook officially announced its own catalog of mobile applications. The catalog, dubbed the Facebook App Center, will allow users to enjoy the wide range of Facebook applications and mobile phone apps across iOS and Android devices.  The company plans to generate additional mobile traffic with the App Center, and Facebook engineers are busy creating products designed to help  its 488 million mobile user base.

Nevertheless, the core problem for Facebook still lies in the advertising model, which generates 85 percent of sales. The advertising revenue per user is no longer growing, and advertisement sales aren’t keeping pace with their gains in mobile users.

“In terms of Facebook’s valuation, the big issue is whether they’re going to be able to grow to have sustainable profits,” said Ritter, finance analyst in Gainesville. “The biggest issue in that regard is the mix of desktop users versus people using their mobile device.”

Facebook will need to jump ahead of its traditional advertising, and maybe even take a share of the revenue generated by developers who are going to sell apps in the App Center, helping it diversify advertisement tactics for the mobile scene.