Ever since Facebook went public on May 18, 2012, the company has scuffled to prove to investors that it is worthy of praise. With this glowing report of the second quarter of 2013, it appears that Wall Street has taken notice.
Facebook pulled in roughly $1.6 billion from advertising — and 41 percent of that is from mobile, with mobile News Feed and app install ads leading the charge. Facebook CEO and Co-Founder Mark Zuckerberg told investors Wednesday that he expected mobile revenue to soon pass desktop:
We now have more daily actives on mobile than on desktop, as nearly half a billion people use Facebook on their phones every day. Soon, we’ll have more revenue on mobile than on desktop, as well. This progress is the result of investments we started making more than a year ago and in some cases, years ago. I appreciate the patience and the trust of our team, our community and our investors.
Zuckerberg said that more people are using Facebook for longer than ever, and this is shown by the comScore data around the boom in mobile minutes spent on Facebook.
Challenged with the task of building products that appeal not only to users but to marketers, it appears that Facebook has finally hit the mark.
In the early days of Facebook’s public status, marketers were skeptical that Facebook could deliver relevant advertising. People even questioned if Zuckerberg was the right fit for the company, wondering if Chief Operating Officer Sheryl Sandberg should take the reins. Investors were unsure of what Facebook could be, and it took the company a few tries before it could solidly say what it actually is.
Sandberg and Zuckerberg beamed success stories of Facebook advertising, touting the power of News Feed ads, Custom Audiences, and mobile app install ads.
Wall Street took notice.
According to MarketWatch, Facebook’s value jumped 18 percent in after-hours trading, to $31.25 — it’s highest price since Jan. 28.
Dan Slagen, Nanigans’ Senior Vice President of Marketing, commented to Inside Facebook on the fruits of Facebook’s mobile focus:
The running joke in our industry is that it’s been the year of mobile for the past how many years now…? Well, Facebook decided to focus on mobile and in a very short amount of time have transformed advertising opportunities on mobile. Ad placements are centralized and offer the opportunity to provide engaging imagery and ad copy that inspires people to take action.
Roger Katz, CEO of social marketing platform Friend2Friend, also championed Facebook’s mobile efforts:
Mobile is absolutely pivotal to Facebook’s future, and to the future of brand advertising — it’s now 41% of ad revenue, up from 30%. The healthy rise in ARPU (23% over Q1), paralleling increasing in mobile usage, can undoubtedly be attributed to the excellent results the company is seeing in sponsored mobile in-Newsfeed units, which are showing killer click-throughs.
However, as mobile-only users continue to rise, Facebook must continue to innovate in ad products, and finely manage frequency and quality, to ensure users aren’t put off by sponsored units in that precious mobile News Feed space.
Zuckerberg noted that advertising in the News Feed makes up roughly 5 percent of all stories, and a Facebook spokesperson wrote that the company “hasn’t seen a meaningful drop in satisfaction when we ask people about their experience with Facebook.” All Facebook execs who spoke Wednesday were happy with the results from News Feed ads. Citing a Datalogix study of 55 campaigns, marketers saw a median return on ad spend of roughly 3x for campaigns that didn’t include News Feed ads, while campaigns with News Feed ad had an ROI of 5.9X.
It’s not just major brands that are taking notice. Facebook recently celebrated a huge milestone: 100 million advertisers. Facebook’s Director of Small Business, Dan Levy, told Inside Facebook that a sizeable portion of that group is small businesses. Facebook reported Wednesday that nearly 18 million local businesses have Facebook pages (up from roughly 16 million in the first quarter).
So now Facebook has a directed advertising base that is becoming more knowledgeable about the company’s ad units, thanks to its constant simplification efforts, an engaged and growing userbase, and a thumbs-up from Wall Street. Zuckerberg and Facebook have, for now, quieted monetization concerns.