Facebook: King of Ads

41% of Facebook’s advertising revenue comes from mobile advertising today according to the latest earnings report that was published yesterday and that is already a 30% increase on this time last year. Mark Zuckerburg, Chief Executive Officer of Facebook, stated: “We’ve made good progress growing our community, deepening engagement and delivering strong financial results, especially on mobile. The work we’ve done to make mobile the best Facebook experience is showing good results and provides us with a solid foundation for the future”.

That surge in mobile advertising comes at a welcome time for Facebook as Yahoo and Google both see their revenues from advertising decrease over the same period. Facebook’s revenue growth from advertising increased by a whacking 13% and that was way higher than was previously expected by analysts.

dvertising in Newsfeed on Facebook

Advertising in Newsfeed on Facebook

Facebook has a staggering 819 million mobile users today, and despite added competition from companies such as WhatsApp Messenger , for example, they have not only maintained but increased their market share. The number of mobile users is an increase of 51% on the number that used Facebook on their mobiles in 2012! While 41% of the revenue comes from mobile advertising, a staggering 88% of the entire company’s revenue is based on advertising today, whether that be on a computer or a mobile device. There are 699 million people that are active users every day of Facebook and 1.15 billion people in the world use Facebook every month, at least. The number of daily users has increased from 58% of the total number of users in 2012 to 61% this year.

So, the reasons behind Facebook’s success faced with Google’s and Yahoo’s recoiling revenues in the sphere of advertising? More and more people have access to internet via smartphones these days and mobile devices. But, that means that there is growing concern to insert advertising on such small screens and still to remain effective. What has Facebook done? It has simply inserted the advertising in the news feeds on the pages of the users of Facebook. There is a growing belief that Facebook is the place to post your company’s ads if you want to get noticed.

The new competitors coupled with the worry that news-feed embedded ads would deter users has proved to be completely wrong, apparently. According to Chief Operating Officer of Facebook Sheryl Sandberg the social network site had increased quantity of newsfeed advertising and also the type of advertising they were providing during this second quarter of the year. Zuckerburg stated that the ads represent about 5% of what is posted on the newsfeed and that means about one in twenty posts is actually advertising. The surprising thing about doing this is that burying the ad in the newsfeed means that a person that connects automatically reads the ad as they may be fooled into thinking it has been posted by a friend or family member. So, it becomes automatically more attractive. How long that will last is highly debatable. Whether or not the users will quickly become aware of the fact that they are the guinea pigs being fed the bait through advertising remains to be seen. Zuckerburg stated that now they had the quantity, they would be working on the quality of the advertising, which in itself should help users wise up to the fact that they are being used. Surely, it’s quality that should have come first.

Sandberg did state that advertising and marketing revenues were up across the board today and that people are prepared to spend more on that. But, at the moment, advertising on mobile devices only stands for 3% of all advertising spending today. The world’s figure amounts to just 2%. So, Facebook believes that the potential is enormous. That is with the added fact that people are spending more of their time on mobile devices today. So, things look set to change. Does, that mean when I check for a new car, I will be inundated by ads for new cars or I check a hotel in Rio de Janeiro that I get ads linked to that as I open my smartphone just like on the PC? Will we never escape from advertising?

Facebook: Mark Zuckerburg

Facebook: Mark Zuckerburg

Apparently, given the fact that most people use Facebook on their mobile devices while watching prime-time television in the evening in the US, the company believes that there is the added potential of using brand marketing in conjunction with other types of media. Sandberg stated that 88 million out of 100 million people in the US use Facebook in this way in the evening.

Facebook’s revenue increased by 53% to $1.813 billion in the 2nd quarter of 2013. Analysts had previously expected revenue to be around the $1.618-billion mark. Revenue stood at $1.184 billion this time last year.

Facebook stock rose a hefty 17% during market trading yesterday and today we shall see if that continues.
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