Facebook has revealed its latest financial figures for Q3 2013, including a rise in advertising revenue of 66 per cent and overall revenue increase of 60 per cent. But what does this mean for the social media giant, especially as mobile advertising represented nearly half of its ad revenue?
Ian James, chief digital officer EME, Starcom MediaVest
Facebook's results today highlight the broader trend across consumer marketing services - showing growth through transformation to mobile and usage in new markets. With 49 per cent of revenues from ads on mobile devices and most of its user growth coming from outside of the US Facebook is becoming a mirror of the transformation from a desktop western internet landscape to a truly global mobile one. These results really underline the speed of the transformation to a mobile first world and underline the importance of the work we create for our clients brands at SMG shifting from media planning and buying by channel to the creation of human experiences which consumers can enjoy across any screen. We are working with all of our clients to ensure all work is intrinsically mobile, easy to discover in search and social platforms and data targeted. Global clients such as Samsung lead the way in combining social activities with engaging mobile experiences on mobile devices. Facebook is a great bellwether for broader consumer media consumption habits and we are thrilled to embrace the huge opportunity mobility and international growth presents for our clients brands and business.
Alan King, head of digital, UM London
I went to bed last night after reading (via Twitter) the headlines of Facebook’s latest revenue figures and there were some pretty impressive numbers banded around.18 per cent audience growth. $880m total ad revenues for the quarter. 478 per cent mobile ad revenue growth meaning 49 per cent of total ad revenue came from mobile. This was the very problem that dogged the share price after IPO. I read that Facebook will account for 5.41 per cent of all global digital ad revenue this year, which isn’t as much as Google but Facebook is growing share faster than Google; especially in the key battleground of mobile.Things were looking rosy indeed and Zuck deserves his title as highest paid CEO in the US. I thought how Twitter would be loving the news in advance of their IPO and made a mental note to learn how to buy shares ASAP.I woke up this morning, checked Twitter and saw the headline ‘$18bn wiped off Facebook Share Price’. It’s all down to this statement by Facebook’s CFO "We did see a decrease in daily users specifically among younger teens."What a swing!There is a deep fear in the market that other services such as Snapchat, WhatsApp or Twitter are taking the teens away who are an indicator of the future. One VC mentioned no one wants to leave an indelible footprint on the Internet so he was putting his money into Snapchat (which has never made a penny). Apparently the Facebook Timeline was a terrible idea because no one will want ten years of posts in one place. The walls are crumbling around Zuck as we speak. I’d say this is just a blip for Facebook, an $18bn blip but a blip nonetheless. The company seems to be up in every way but one and you’ll probably find that many younger teens are migrating to Instagram anyway and Facebook will be posting ad revenue figures from that source soon and the share price will probably be the best it’s ever been. The real takeout from all this is that things in the Internet world move at lightning speed and any company resting on its laurels will sink fast. Facebook has risen to every challenge so far and I can’t find a good reason why it will not continue to do so. It’s betting heavily on native advertising for the mobile world and I agree.
Jason Carter, head of Map UK, (IPG Mediabrands)
Facebook’s earnings landed pretty much like we thought they would. They’ve been making incredibly strides this year since stumbling a bit coming out of their IPO.From an agency and brand perspective, Facebook had work to do in terms of simplifying their story and value proposition to brands. In our mind, they’ve come a long way in that aspect – reducing confusing ad options, clarifying their place in the digital ad market, and overall doing more with less. Their focus on mobile over the past year has clearly paid off when you look at almost half of ad revenue attributed to mobile. The shift to mobile isn't new, but Facebook is taking a larger chunk of that mobile market from Google - something to watch closely. With the initial rollout of ads on the Instagram platform, Facebook is pushing even further into the mobile space – and we’re excited to see how those ad formats develop. Zuckerberg noted that the average user is interacting with one ad per week - which is fairly high. We attribute that to the enhanced targeting and native content experiences Facebook has developed and is continuing to expand through mobile - and soon on Instagram.
Darren Goldie, chief development officer & managing partner, Havas Media
With the likes of Cisco suggesting that the number of mobile devices will tip seven billion over the next year and connection speeds doubling year on year, we would expect Facebook to build on their one billion mobile users significantly over the next 12 months. People are continuing to increase the number of times they check their mobile device each per day (currently around 150 times across all activities) which has allowed Facebook's mobile revenue to jump to $880m this quarter, compared to just $150m a year earlier. Over the next 18 months, we see their main threat as the significant growth of live chat applications such as Whatsapp and LINE which have dominated with 1.4 billion more chat-app messages sent this year than last. Facebook needs to address this challenge head on to maintain their core customer proposition.
James Hilton, CEO, M&C Saatchi Mobile
I am not surprised by the recent mobile growth figures released by Facebook, and what is more exciting to mobile marketers is that there are plenty of mobile features yet to come to market. Due to the frequency of usage from a Facebook mobile user, the amount of unique data it can collect, and the continued advancement and penetration of handsets and tablets, I foresee substantial Facebook mobile growth for some time ahead.
Andrew Newman, director of European operations and analytics, Rocket Fuel
When Facebook first went public, there was a lot of criticism for it being far too reliant on traffic from mobile devices, and not turning this into a monetised opportunity. However, it has since launched the Facebook Exchange advertising platform which enables advertisers to programmatically serve ads that feel non-invasive and anonymous, yet extraordinarily relevant. Facebook has also been particularly clever with Newsfeed advertising. They’re charging per insertion, instead of per impression. Ads are persistent in the users’ feed, and all their friends will see them also and this is done without impacting on a user’s privacy. Facebook has leveraged the principle called “homophily” that guides a lot of social advertising, the basic idea that your friends will be interested in the same products as you.” One of the next steps for Facebook has to be the introduction of in-app advertisements. When this happens Facebook will have to be exceedingly careful not to aggravate its users by bombarding them with irrelevant ads. If Facebook is able to use the lessons it has learned through the launch of display and newsfeed ads, then I’m sure in-app advertising will provide great opportunities for advertisers and Facebook alike.
Sephi Shapira, CEO, MassiveImpact
It is quite certain that next quarter will be the first ever where Facebook's mobile business surpass its online. This is a clear indication of the huge potential that the constantly evolving mobile ecosystem holds for new comers that position themselves correctly. Facebook's mobile ad strategy deeply resonates with a core market trend towards performance advertising, maintaining this focus will propel Facebook into a position of leadership.
from Joel Nierman, media and marketing director, Critical Mass
Ever since Facebook’s execs shared its growing mobile revenues on an earnings call, the company’s stock price has skyrocketed. Why? Because investors are recognizing a macro-trend that us digital insiders have been predicting for a few years now. The legend of the year of mobile has ridden alongside a slow build instead of inspiring a watershed moment, and the build is finally high enough for outsiders to see above the trees. And while the attention of financial folks may legitimize all the mobile talk and spur a new set of startups looking to capitalize on the perceived mobile moment, the financiers have realized something much more important than “mobile is important now.” They know how mobile ads and marketing will be delivered – not via mobile banners, but as an integral part of a cross-screen environment. Right now only Facebook and a handful of others can deliver this cross-screen capability and format. Facebook is the most focused of any of these companies on a mobile ad product, hence the stock price boost. Over the long term it remains to be seen if a more compelling cross-screen ad product comes along. For now, the ad money follows the investment money.
