Facebook mobile ads fuel revenue jump
Mobile now accounts for just short of half of Facebook’s total ad revenue, but there are concerns over a decline in teenagers using the site and plans to limit news feed ads.
By Sarah Vizard
Facebook’s admitted yesterday (30 October) that it was seeing a drop in young people logging in for the first time. Its chief financial officer, David Ebersman, said that while youth engagement was “stable” overall, it has seen a decrease in daily users, specifically among younger teens.
Facebook also said it will limit the number of ads that feature in the news feed. Facebook said in July that it was showing around one ad per 20 posts in the news feed and Ebersman said that while this ratio is now “modestly higher” than 5 per cent, it will not increase much in the future.
He added that the percentage of promotions is the “least important tool” in boosting revenues. Facebook will instead focus on growing its user base and increasing demand to boost revenues.
His comments, combined with the remarks about declining teen usage, led to a drop in Facebook’s share price by 3 per cent. This despite a 60 per cent year-on-year jump in the social network’s revenues to $2.02bn in the third quarter and profit coming in at $425m, compared to a loss of $59m last year.
Facebook says prices for its mobile ads remain “high” and users are clicking on its news feed ads more frequently. CEO Mark Zuckerberg said on a call with analysts that the average daily Facebook user is “engaging” with more than one ad per week.
Advertising revenues hit $1.8bn, with mobile now representing 49 per cent of Facebook’s ad business, generating around $880m in the period. This is up from $150m a year ago when Facebook was just beginning to develop its mobile ad business.
Users are also increasing, with Facebook counting 1.19 billion monthly active users at the end of September and 728 million daily active users. On mobile it has 874 million monthly users, with 507 million logging in daily.
“For nearly ten years, Facebook has been on a mission to connect the world,” said Mark Zuckerberg, Facebook founder and CEO. “The strong results we achieved this quarter show that we’re prepared for the next phase of our company, as we work to bring the next five billion people online and into the knowledge economy.”
