Facebook may no longer be cool with teens who haven moving onto other cooler social media sites but the world’s largest social media company has continued to please financial markets with its impressive growth in the mobile advertising revenue market.
The company’s latest financial disclosure had markets happy with analysts having a generally positive outlook for the company, putting the company’s upper price target for the social media giant at US$102 (against January 29’s closing price of $75.90).
Facebook’s mobile bright spot
Mobile advertising revenue is one bright spot for Facebook. Mobile ads made up about 69% (53% in Q4 2013) of Facebook’s fourth quarter advertising revenue.
Facebook’s fourth quarter mobile advertising revenue rose to US $3.59 billion, an increase of 53%, compared with $2.59 billion seen a year ago. Excluding the impact of year-over-year changes in foreign exchange rates, revenue would have increased by 53%.
For the full 2014, Facebook’s total advertising revenue was US$16.2 billion, up 58% from a year earlier.
Bloomberg’s contributing editor David Kirkpatrick notes that Facebook has beaten analysts’ expectations nine out of 10 quarters.
He adds that three years ago, when Facebook went public, most analysts didn’t think Facebook “get” mobile, yet the company has doubled its mobile advertising revenue within two years.
Felix Richter writes on Statista.com that mobile ads have account for more than 90% of Facebook’s revenue in each of the past seven quarters.
“When Facebook started selling mobile ads in 2012, not even the keenest optimists could have predicted how big a success they would be for the company.
“In the past three months, mobile advertising sales amounted to almost US$2.5 billion. Having doubled since the previous year's holiday quarter, mobile ad revenue now accounts for more than two thirds of Facebook's advertising revenue and 64% of total revenue,” he says.
Mark Zuckerberg’s vision
Former Facebook executive Ali Rosenthal told Bloomberg that founder Mark Zuckerberg has been always very consistent about his long-term vision for Facebook as a connector for the world, and he had picked up earlier on that the mobile phone is, for many people outside of the US and Canada, the only way of staying connected.
According to Facebook’s financial release:
- Mobile daily active users (DAUs) totalled 745 million on average for December 2014, an increase of 34% year-over-year.
- Monthly active users (MAUs) were 1.39 billion as of December 31, 2014, an increase of 13% year-over-year.
- Mobile MAUs were 1.19 billion as of December 31, 2014, an increase of 26% year-over-year.
Baby boomers on Facebook
While the market had been afraid younger users were abandoning Facebook for Instagram and Snapchat, older users are flocking to the social media site.
An interesting piece of statistics reported by istrategylabs.com show that of teens in the 13-17 age group, 57.1% were iOS users. Among the older folks, in the 55+ age group, 38.6% were iOS users.
While there has been a 25% drop in the teen user group in from 2011 (as of January 2014), there has been an 80.4% jump in the 55+ user group on Facebook.
Facebook remains the dominant social media force having 890 million users, owns Instagram, as well as WhatsApp.
CNBC reports that Facebook now has three billion video views per day, up from one billion users in September 2014.
Facebook Chief Operating Officer Sheryl Sandberg told CNBC: “From the advertising side, that give us an opportunity to do more monetization because our ad products always follow our consumer products. When consumers do more video we have the ability to do more video ads," Sandberg said, adding investments on mobile developments have paid off, as there is a shift towards mobile.
The question analysts are asking is how can Facebook’s video business be converted into advertising revenue. Currently YouTube is the dominant video platform, with one billion unique users visiting each month. Some 100 hours of video clips are uploaded to YouTube every minute. Almost 40% of its global watch time comes from mobile users.
Meanwhile search engine giant Google will continue to retain around half of the world’s share of mobile ad dollars despite the share falling to 50.2% in 2014 from 50.4% in 2013, according to emarketer.com. Facebook’s share is said to be around 22.3%, up from 17.8% in 2013.