Facebook cracks mobile with more ad sales than desktop

Reuters Read more January 30, 2014

Half of Facebook’s advertising revenue is now coming from mobile ads, the company has said.

Facebook cracks mobile with more ad sales than desktop

Facebook said that revenue from mobile ads represented 53% of its total advertising revenue in the last three months of the year, or $1.24 billion, versus the 49% proportion that mobile ads represented in the third quarter.

Facebook said it now has 1.23 billion monthly users, with 945 million accessing the service on a smartphone or tablet.

“They’ve cracked the code on mobile,” said Arvind Bhatia, an analyst at Sterne, Agee & Leach. “Within a little over a year’s time mobile has taken over desktop,” in terms of ad revenue he said.

They’ve cracked the code on mobile

Facebook’s newsfeed ads, which inject paid marketing messages straight into a user’s stream of news and content, have boosted Facebook’s revenue and its stock price in recent months. The ads are ideally suited for the smaller-sized screens of smartphones and other mobile devices.

The average price per ad on Facebook has surged 92% in the past year, the company said, even as the total number of ad impressions on Facebook declined 8%.

In a conference call with analysts, Facebook CEO Mark Zuckerberg said the focus going forward was to improve the quality and the relevance of the newsfeed ads, rather than boosting the amount of ads in users’ newsfeed.

Among the other priorities for the coming year, Zuckerberg said the company would focus on creating new standalone products and on improving Facebook’s nascent search product.

Daily use rising

Facebook had spooked some investors in October when it said that it noticed a decrease in daily users among “younger teens.” The remarks raised fears that teen Facebook users might be drifting to new messaging services such as Snapchat and WhatsApp.

FacebooFCO David Ebersman said the company did not have an update to share about teen usage during the quarter, though the company noted that overall user “engagement” had increased throughout 2013.

Roughly 61.5% of Facebook’s 1.23 billion monthly users visited the site every day in the fourth quarter, an increase from the 58.3% ration in the fourth quarter of 2012.

“The engagement on their site is going up and they’re recapturing people on Instagram, so they’re not losing people,” said Jefferies analyst Brian Pitz, referring to the Facebook-owned mobile photo-sharing service.

Overall revenue in the fourth quarter rose to $2.585 billion, compared with $1.585 billion in the year-ago period.

Ebersman said that expenses in the coming year would likely increase around 35% to 40%. He did not provide a revenue forecast for 2014.

Facebook reported net income of $523 million versus $64 million in the year-ago period.