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Facebook’s ad revenue might have surged, but it has work to do to satisfy marketers says Forrester analyst


By Jennifer Faull, Deputy Editor

July 24, 2014 | 3 min read

Facebook today reported a second-quarter revenue of $2.91bn, an increase of 61 per cent, but it still has some way to go before marketers are truly satisfied with it as a platform, according to Forrester analyst Anthony Mullen.

The revenue surge was fuelled by mobile advertising (it represented 62 per cent of advertising revenue), which may have been expected given CEO Mark Zuckerberg’s claim that one in every five minutes spent on Facebook is on mobile – a statistic Mullen described as “incredible”.

“It’s real evidence they are delivering consumers what they want,” Mullen said. “That’s all good for consumers, and for Facebook, but it’s a different story when we talk to marketers about how satisfied they are with Facebook as a platform.”

Mullen said that Facebook as a social marketing platform “hasn’t really panned out”, with brands telling Forrester that the organic reach of posts remains disappointing.

“Marketers tells us that Facebook isn’t the best performing channel by any stretch. In fact it sits at the bottom in terms of how effective it is in comparison to other advertising tools. Marketers aren’t satisfied and we’re beginning to see them develop their own social properties on their own websites."

However, what is overwhelmingly appealing to marketers is Facebook's data and Mullen said he has seen the platform begin to explore what it can do with the vast amount it has on its users, of which it reported a daily average increase of 19 per cent year-over-year.

“No matter which way you slice it Facebook data is attractive to marketers. Whether it is being used efficiently by Facebook for advertising or whether it is being used in conjunction with other first party data by brands – the data they have is really powerful.

“But, whether its competency or fear, they haven’t maximised it like they could. They’re now going to start using that data in a much smarter way.”

Mullen also predicted its experiments in e-commerce could result in something “impressive” for brands, saying that Facebook had a “dalliance” in the past by sharing what users had bought without permission (which “went down like a lead balloon”) but now it will be much more sensitive with how it mixes social and commerce.

“If anyone can make social selling work it will be Facebook and I wonder what Amazon are thinking about this. If one in every five minutes are spent on mobile then the capacity for in-page buys could be really quite impressive,” he suggested.

“But it’s a balancing act of how much content is purchasable. Over the next couple of years they will start to make that work.”

Finally, Mullen was intrigued by Zuckerberg’s ambition “to define the next generation of what computing will be” following its purchase of Oculus Rift, which was completed yesterday 23 July.

“That’s Google level ambition. It’s going to start doing some really interesting and immersive things with Oculus Rift.”

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