Facebook doubles mobile ad sales

31 Jan 2013
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Facebook finds success with smartphone and tablet users

Facebook doubled its mobile advertising revenue in the fourth quarter, finding success in smartphones and tablets after early struggles.

The company's overall advertising business grew at its fastest clip since before its May initial public offering, helping the company's revenue expand 40%.

David Ebersman, head of finance, said Facebook had "basically doubled" mobile ad revenue from the third quarter to the fourth quarter.

"Two quarters ago we really had no mobile revenue," Ebersman told Reuters in an interview. "In the course of a pretty short period of time, we've dramatically ramped up our ability to monetise mobile."

In the course of a pretty short period of time, we've dramatically ramped up our ability to monetise mobile

Facebook has rolled out a wide variety of new services in recent months as the company seeks to stay ahead in the fast-moving web market and to convince investors that it can turn its audience of more than one billion users into a sustainable business.

Founder Mark Zuckerberg said the company plans to spend heavily to recruit talent in 2013 as the company pushes forward with new product development, particularly "mobile-first" services.

"We aren't operating to maximise our profit this year but we're doing what we think will build the best service and business over the long term," Zuckerberg said during a conference call with analysts on Wednesday.

The strategy makes sense for an internet company, said Stifel Nicolaus Jordan Rohan. But it will force analysts to "ratchet down" their profit expectations.

"The conference call was a bit of a sobering event," said Rohan. "The company advised analysts and investors to expect lower margins, and downplayed the near-term opportunity for revenues from Gifts," Facebook's recently-launched online commerce service.

Future opportunities

Zuckerberg said that recently introduced products such as Gifts, which allows Facebook users to purchase retail goods for their friends, as well as its new social search tool could become important businesses in the future. But in the near term he said that Facebook's advertising efforts will be the core of its business.

The number of monthly active users on the social network reached 1.06 billion at the end of last year, with 618 million daily active users, Facebook said.

But much of that growth again came from emerging markets like Asia, rather than the United States or Europe, where revenue per user is several times higher. For instance, average revenue per user is $13.58 for the United States and Canada, but just $2.35 in Asia.

Overall fourth-quarter revenue came to $1.585 billion, up 40% versus $1.131 billion a year earlier. Facebook said net income in the fourth quarter was $64 million, compared to $302 million a year earlier.

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