While the market rejoices in Facebook's second quarter earnings, some question their ability to grow without concentrating on the user experience.
While the market has expressed its pleasant surprise over Facebook’s second quarter earnings, some are not so sure that all that glitters is gold for the social media company. Facebook’s stock was up more than 19 per cent after reporting $333m in net income on the back of better than expected total ad sales in the quarter, leading CEO Mark Zuckerberg to claim, “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.”Facebook says that mobile ads accounted for 41 per cent of the total ad sales in the quarter, a big jump from 30 per cent last year. Ad sales accounted for 88 per cent of Facebook’s revenue, up 61 per cent. The company saw $214m from payments and other fees, an increase of 11 per cent. Now that Facebook has turned itself into a mobile ad company, the new figures will be seen as their new baseline for growth and some nagging questions over how Facebook will expect to maintain this type of growth. With traditional news considered significantly better and trusted sources, and other social networks beginning to capitalize on their own monetization, pressures on growing Facebook’s user base will continue. With new specialized social networking sites like SnapChat and competitors like Twitter, Facebook will have to address the stagnation in growth of users coming to and using the network. PR boss Simon Wharton of PushON said: "Despite the surprisingly strong performance of its mobile ads, Facebook has got a number of issues on its plate. For starters, it is arguably at the top of the growth curve in terms of users. One seventh of the world's population is a lot of people. "At the same time, younger audiences are increasingly turning to alternative social networks such as SnapChat, Twitter and YouTube. Facebook seems to be the favourite haunt of mums and dads, not their young children — and that is a cause for concern.Alongside increasing competition, with rumours that Facebook is going to move soon to Video Ads, it is not surprising that questions persist about Facebook’s commitment to its user's experiences. "At some point soon we're expecting the world's biggest social network to announce Video Ads as the new big revenue builder. But while this will be seen as a positive by shareholders, Facebook is again focusing more on the money to be made from advertisers than the experience of its users," added Wharton. "The reaction from users to this new form of social advertising will be critical. Will video ads help or hinder Facebook as a brand? If it is the latter, then Facebook could be in real trouble."
