Facebook’s Mobile Ad Revenues Doubled over Q4, 2012

Facebook has reported revenues of $5.1bn for the full year 2012, up 36 per cent from 2011’s figure of $3.8bn. However, profits fell sharply, down from $1bn in 2011 to just $53m for the year, due largely to the amount of money Facebook spent investing in mobile during 2012, including its $1bn acquisition of Instagram.

This investment has certainly paid off in terms of encouraging mobile growth, with mobile accounting for 23 per cent of all advertising during Q4, compared to 14 per cent the previous quarter.

Meanwhile, the number of monthly active users in Q4 increased by 57 per cent year-on-year, to 680m – more than half of the total number of monthly active users (1.1bn) overall. Daily active users on mobile, meanwhile, exceeded web users for the first time.

The analyst’s view

Eden Zoller, principal analyst at Ovum, thinks the results are encouraging for Facebook’s future, despite the drop in profits it suffered during 2012.

What stands out from Facebook’s Q4 results is the centrality of mobile for its service strategy and growth,” said Zoller. “Sponsored stories in the mobile news feed and app install ads proved effective, with Wal-Mart alone delivering 50m mobile ads to customers.

“This solid progress on the mobile advertising front should be applauded, as a key challenge for Facebook has been how to monetize its growing mobile user base, particularly as an increasing number interact with the platform by only via mobile devices.

“Facebook also noted that the recently launched Graph Search would be a pillar for future growth, although it would not be drawn on details. There will be growing pressure for Facebook to monetize Graph Search over the coming quarters and the most obvious way it could do so is via sponsored search. Although revenues from gifts and games only present a small part of Facebook’s revenues the story on this front was muted, as were insights into Instagram’s contribution to future growth.”

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