Profile: Jeremy Gilley

The man marketing world peace

Facebook revenue boosted by mobile ad revenues

Facebook has claimed it is now “a mobile company” after its better than expected fourth-quarter earnings were boosted by a surge in revenues from mobile advertising as smartphone users exceeded desktop ones.

Facebookmobile-product-2013

Company predicts it will eventually make more money on mobile than PCs.

The company revealed advertising on its mobile newsfeed accounted for 23 per cent of its advertising revenue, up 14 per cent on the previous quarter. Revenue rose 40 per cent during the period to $1.59bn (£1.01bn) up from $1.3bn (£718.9m).

Facebook predicts that it will eventually make more money on every minute spent on the Facebook mobile app than on a desktop computer. It is planning to embark on a major recruitment drive for mobile specialists over the next 12 months as it looks to ramp up production of services around the nascent channel.

Chief executive Mark Zuckerberg says: “In 2012, we connected over a billion people and became a mobile company. We enter 2013 with good momentum and will continue to invest to achieve our mission and become a stronger, more valuable company.”

He added recently released products such as Gifts, which allows users to purchase physical goods for their friends, as well its Graph Search tool, could become key services in its year of “critical investment.”

The company also hailed the success of its Promoted Posts service, claiming almost 500,000 pages have used the advertising format. Facebook’s chief operating officer Sheryl Sandberg said around 30 per cent of Promoted Posts users are brands and 70 per cent go on to use the service again.

Mobile monthly active users, which the company is relying on for future profitability, were around 680 million as of 31 December 2012, a 57 per cent increase year-on-year. Meanwhile, the social network has 618 billion daily users, an increase of 28 per cent on the previous year, and 1.06 billion monthly users, up over a quarter over the same period.

Last year, Zuckerberg rejected criticisms that his company is not ready for a shift to mobile devices, insisting that the it would launch “some killer” services on the platform in the coming months. Last September, it begun testing its own fledging mobile ad network in a bid to persuade brands to pay a premium to target ads using its own data rather than opting for cheaper deals with ad exchanges.

Industry observers say Facebook’s biggest long-term challenge remains how to profit from the vast amounts of personal data it has without alienating users or incurring the wrath of government regulators.

Eden Zoller, principal analyst at Ovum, adds: “What stands out from Facebook’s Q4 results is the centrality of mobile for its service strategy and growth. This solid progress on the mobile advertising front should be applauded as a key challenge for Facebook has been how to monetise its growing mobile user base, particularly as an increasing number interact with the platform by only via mobile devices.

“There will be growing pressure for Facebook to monetise Graph Search over the coming quarters and the most obvious way it could do so is via sponsored search. Although revenues from gifts and games only present a small part of Facebook’s revenues the story on this front was muted, as were insights into Instagram’s contribution to future growth.”

Readers' comments (1)

  • Investor's are definitley over reacting to the situation. Everyone was looking for the Mobile Revenues and when Facebook came up with good numbers and indicate that the future of Mobile Revenues is also looking very good then in reaction to that shares drop. I know the Profit margins fell but Investor's need to understand that Facebook is investing in itself , so for short term it may decrease profit margins but for long term it is looking very very impressive . A big thumbs up for Facebook. Insight at

    http://wallstnews.blogspot.com/

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