Facebook mobile ad revenues poised to overtake desktop
Facebook’s mobile advertising revenue is set to overtake desktop in the coming months after increased spending from advertisers on video and its smartphone services helped lift quarterly revenue.
The world’s biggest social network posted a 53 per cent year-on-year increase in revenues for the three months to 30 June. Ad revenue accounted for 88 per cent of that figure $1.60bn (£1.05bn), representing a 61 per cent jump on last year.
The surge was driven by the growing appetite from advertisers for its burgeoning mobile offering, which now accounts for 41 per cent of all ad revenues. In its first quarter, mobile ad sales accounted for 30 per cent of total ad revenues. Facebook only introduced advertising to its mobile platforms early last year.
Mark Zuckerberg, chief executive of Facebook, said the company will “soon” have more revenue on mobile than on desktop.
The announcement follows concerns a year ago from investors that the company would not be able to generate enough revenue from mobile following its IPO. Of its 1.15 billion monthly active users globally, 819 million are now also on mobile, up from 543 million a year ago. Facebook also revealed it had 469 daily active users on mobile, up from 293 million a year ago.
Zuckerberg adds: “We’ve made good progress growing our community, deepening engagement and delivering strong financial results, especially on mobile. 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.”
He also promised to invest more in “improving the quality” of ads on Facebook and cited advertising on Instagram as a “really big opportunity” that the business would capitalise on when “the right time comes”. It is also moving forward with plans to expand its video offering to advertisers beyond brands simply embedding clips in their Page posts.
Despite the early success of its mobile platform, observers warn Facebook will face a “a number of challenges” as it attempts to monetise users in more mature markets.
Thomas Husson, analyst at Forrester, says: “A growing chunk of Facebook’s mobile audience is coming from developing countries like Indonesia, Malaysia or the Philippines. Facebook announced they had more than 100 million users using their app designed for simple mobile phones.
“The majority of their mobile audience is actually not US-based, while I’d expect a good chunk of the mobile ad revenues to come from US marketers. This transition will be key to close the monetisation gap as well as Facebook’s ability to maintain the price of their mobile ads.”