Facebook Ad Revenue Sees Huge Growth Driven by Mobile Success
They must be feeling silly right about now. Clearly, someone is clicking those Facebook ads. A whole lot of people, it seems.
Facebook just announced over $2.9 billion in revenue for the second quarter of 2014, a whopping 61% percent gain over the same period last year. Advertising accounted for $2.68 billion of their total income, with mobile advertising responsible for 62% of the total advertising take. Over 1.5 million advertisers are now using their service, said Sheryl Sandberg.
The social giant did manage to keep GAAP costs and expenses growth at a lower rate despite their astronomical revenue growth, up just 22% over Q2 2013. Overall, Facebook's GAAP net income was $791 million, up 138% over this quarter last year.
Advertising Revenue Rebounds in North America
Advertising revenue in Canada and the United States had fallen in Q1 2014, but rebounded this quarter.
The skyrocketing average ads price we're seeing – a 123% cost increase – was consistent with more ads appearing in the newsfeed, a Facebook rep said during the call. Facebook is still focused on driving better returns for marketers, he said, citing the recent sidebar ad redesign as one example.
Mobile app ads are growing and remain a "good" source of revenue for Facebook, said Sandberg. However, she cautioned people against thinking of the mobile opportunity only in terms of apps.
Users Flock to Facebook in Record Numbers – and They Prefer Mobile
People are growing tired of Facebook and spending their time elsewhere.
And if you believe that, I have some snow to sell you.
It turns out that Facebook has more active users – daily, monthly, and on mobile devices – than ever before. Mark Zuckerberg opened the earnings call with a few statistics, including this statement: "1.32 billion people are now connecting on Facebook each month, and 63% of them are visiting daily."
Facebook users love mobile, too – 654 million of them use Facebook mobile daily.
Facebook Users Generate More Revenue Per Person Than Ever
Each of those users is worth more than ever before to Facebook, as well. Worldwide, each Facebook users now generates a total of $2.24 in revenue for the network. Unsurprisingly, North American users account for the greatest portion of revenue per user, at $6.44 - $5.79 from advertising and $0.66 from payments.
Facebook is all about helping their advertisers drive business results, Sandberg said, and to that end, they'll continue working on ad measurement and attribution. Connecting offline sales to online ads is going to remain a "very big focus," she said.
Will Facebook Take a Shot at Web-Wide Search?
As of last month, more than one billion search queries occur every day on Facebook. Zuckerberg hinted they will focus heavily on search in the next few years. It's an interesting concept, considering the vast majority of searches on Facebook would be simply navigational – trying to find an event, or a user profile.
Is Facebook planning a run at a piece of Google's search engine pie? Maybe it was just a dig back at Google after they took a swing at Facebook's social ads business with G+ Post Ads this spring. We'll have to wait and see, but it's unlike Zuckerberg to make ambiguous comments about where his company is headed – especially in a scripted call to his investors.
What's Next for Facebook
Internet.org is a big priority for Facebook in the near future, Zuckerberg said. They expect to launch a new set of free internet services later this year in a number of markets. Giving everyone more tools for connecting, like Instagram messenger, is another area of focus, he said.
Don't expect Facebook to play a greater role in e-commerce, said Sandberg. Facebook clearly isn't interested in actually selling products, preferring instead to stay firmly rooted in advertising and helping drive traffic to other sellers.
Facebook is still in the early days of building their Instagram, video and other ad revenue and cautioned investors that revenue should be expected to remain low for the foreseeable future. They're going to "ramp up" the amount of organic video content in the newsfeed; they don't want the only autoplay content to be ads, said Zuckerberg. However, he acknowledged they have to be careful that they aren't overloading users with data usage.
In response to a question near the end of the call, Zuckerberg gushed over Messenger and the potential for users to continue sharing more content with just the people they choose, even using an anonymous login. Privacy allows people to feel safe sharing different types of content, he said, and this goes right back to the reason Facebook was started and why it's grown into the behemoth that it has.
"At some level, there are only so many photos you're going to want to share with your friends," Zuckerberg said.