Facebook manages switch from desktop to mobile
Posted on 2 May 2013 at 09:23
Facebook's mobile advertising revenue growth gained momentum in the first three months of the year as the social network sold more ads to users on smartphones and tablets.
New types of ads designed for smartphones, particularly ads aimed at enticing Facebook users to install mobile apps on their phones, helped lift revenue while traffic to the social network remained strong.
The results reassured investors that Facebook was keeping up with consumers' shift from PCs to smartphones, even if the company provided few big surprises during the first quarter.
We're starting to see real revenue from mobile app installs
Mobile ad revenue accounted for 30% of Facebook's ad revenue in the first quarter, compared to roughly 23% in the fourth quarter. Sales of ads on mobile devices have been a key element in the recovery of Facebook's overall ad revenue from a sharp slowdown early last year.
"Everyone was focused on two things, one was mobile and how big it could be, and the other thing was engagement," said Ronald Josey, an analyst with Jefferies & Co.
Facebook delivered solid results on both fronts, Josey said, noting that consumers' use of Facebook does not appear to have declined despite a growing array of popular social networking and mobile messaging alternative services, such as Pinterest and WhatsApp.
Mark Zuckerberg, Facebook's 28-year-old co-founder and chief executive, told investors on a conference call that there was room for Facebook and rival services to thrive. He said mobile photo-sharing service Instagram, which Facebook acquired last year, was now growing faster than Facebook did at a similar stage in its history.
One nascent type of mobile advertising pioneered by Facebook — ads that encourage users to install third-party apps — could grow meaningfully, Zuckerberg said.
"We're starting to see real revenue from mobile app installs," Zuckerberg said, without giving details. "It's one of our most important new ad products."
Facebook said it now counted 1.11 billion monthly active users and about 665 million daily active users. The company said the number of monthly users who logged on solely through mobile devices more than doubled to 189 million users from a year ago.
Facebook has rolled out a string of big product launches and revamps in recent months, including an overhaul of its newsfeed and search feature, as well an app for Android smartphones that puts Facebook features front and center on phone homescreens.
The various initiatives have contributed to rising spending, with Facebook's 60% year-on-year increase in costs and expenses outpacing the 38% revenue increase.
Facebook said it earned $219 million in the first three months of the year, compared to $205 million in the year-ago period.
Facebook's revenue in the first quarter totaled $1.46 billion, versus $1.06 billion in the year-ago period, and roughly in line with analyst expectations. Advertising revenue was up 43% in the first quarter, the fastest growth rate since the end of 2011.
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