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Facebook Solves Its Mobile Revenue Problems… And Then Some!

October 22, 2014 - Business, Mobile, News -

Remember when Facebook’s stock was tanking and they actually came out and said in their IPO filing that they did not generate any meaningful revenue from mobile? It appears that those days are a distant memory.

By 2016, eMarketer estimates that Facebook will have nearly I billion users accessing the network on a mobile channel, and that mobile will account for almost 75% of total ad revenue.

Now, the number of users accessing Facebook via mobile is impressive but not surprising. The experience is essentially the same across all platforms and some of the intrinsic benefits if mobile –- always present, always on — dovetail perfectly with the core benefit of Facebook itself.

Additionally, if you look at the largest Facebook markets outside the U.S., you see a list of countries (India, Indonesia, Brazil and Mexico) where mobile over-indexes for access to types of content.

What has changed? I mean, even in 2013, when Facebook was struggling with how to make money on mobile, over 60% of users were on mobile. So the audience has been there.

The difference lies in how they defined their core problem: making money on mobile. Facebook no longer looks to be a company making money on the platform; rather, they see themselves as a mobile company. That 61% mobile engagement in 2013 was not being monetized at all. Now, the company is all about proving their mobile value, offering superior tools to track advertising effectiveness and reaching out to small businesses on the platform, among other things.

Possibly most importantly, they are seeing increased demand for ads, allowing them to serve higher-value ads without increasing the ad frequency on the site (something for which investors excoriated Sheryl Sandberg earlier this year but which is proving to be working with users).

The result is that ad revenue per user is up 27% in the U.S., and almost 25% worldwide.

This is what it looks like when a company stops trying to capitalize on mobile and starts trying to exist as a mobile business.

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