Shares in Facebook have jumped 18% as the social network beat earnings expectations with stronger than expected mobile ad sales. Facebook earned $333m (£217) in the April-June 2013 period, up from a loss of $157m (£102.5m) in the same period a year ago. The company said mobile adverts now account for 41% of its total […]
Shares in Facebook have jumped 18% as the social network beat earnings expectations with stronger than expected mobile ad sales.
Facebook earned $333m (£217) in the April-June 2013 period, up from a loss of $157m (£102.5m) in the same period a year ago.
The company said mobile adverts now account for 41% of its total revenue.
Revenue grew 53% to $1.8bn (£1.18bn) from $1.2b (£780m), the highest revenue growth since the fourth quarter of 2011, when it was still a private company.
“We’ve made good progress growing our community, deepening engagement and delivering strong financial results, especially on mobile,” said founder and chief executive Mark Zuckerberg.
“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.
Improving ads
The company has focused on improving perfecting its ad sales programmes.
Last month, it announced changes to its Ads Manager which it said would provide advertisers with better data.
In April, Facebook won back General Motors almost a year after the car company pulled advertising from the site.
According to chief financial officer David Ebersman, 20 billion minutes a day were spent on Facebook in June.
“This quarter marks the end of our first year as a public company and I think we’ve created a good foundation for the future,” said Mr Zuckerberg on a call to discuss the earnings.
Half of traffic from mobile
Facebook saw $655.6m in revenue from mobile ads in the three months from April to June – more than 41% of the total $1.6bn it made from advertising overall, compared with 30% for the same period last year. The number of mobile users expanded 51% to 819 million.
Google is still the dominant market leader when it comes to mobile ads.
It is estimated that the company held a 52% share of the global $8.8bn (£5.75bn) mobile ad market last year. This year, it is expected to grow to 56%.
Zuckerberg also discussed one of the company’s most recent innovations: the introduction of video to Instagram, the photo sharing platform that Facebook bought in April 2012 for $1bn.
The video feature was introduced to compete with Twitter’s short video sharing service, Vine.
“Adding video fits really naturally with the Instagram mission,” said Zuckerberg.
Analysis
Commenting on the results, Marco Veremis, CEO of Upstream , said: “The fact that Facebook is generating over a third of its revenue from mobile is testament to its success, effectively treading the fine line between offering relevant promotions, without being regarded as intrusive. Yet, despite these encouraging figures, they will become largely redundant if Facebook continues to lose subscribers and fail to win new users. Facebook penetration in Western markets has reached a point of saturation, but Facebook needs to monetize these existing users and keep them engaged keeping a balance between what it can offer to brands and having a seamless user experience – hence the launch of multiple ad products like the mobile newsfeed, sponsored stories, the rumoured introduction of video ads and of course Facebook Home.
“Additionally, Facebook needs to continue doing everything it can to acquire more customers in new markets. The company has already made significant headway in emerging markets, with “Facebook For Every Phone” being used by more than 100 million people each month, but more can be done. A great demand exists for the social network in these regions, in fact research we conducted found that 70 per cent of consumers want connectivity to the social network and one in three desire a ‘Facebook phone’. The challenge for Facebook now is to help these consumers overcome the data costs associated with accessing the network which act as a barrier to connectivity. However, if Facebook continues its partnership with mobile network operators in these regions to offer free and discounted Facebook features, such as its collaboration with Indostat and DiGi, it is poised for growth and success.”
