Facebook benefits from mobile ad boom
Friday, July 26, 2013 - 13:43:39
Facebook has been in a difficult position over the last year after its initial public offering failed to generate the kind of big share price increases that many had predicted.
The rocky start was compounded by the fact that the company found it hard to prove that it was actually making enough money to justify its multi-billion pound valuation.
But now it seems to have found its feet, thanks to the significant growth in the number of users who are using this particular social networking platform from smartphones.
The earnings report for Facebook's financial performance in the second quarter of 2013 has shown that 41 per cent of the money that it makes from advertising is generated on mobile devices.
Chief exec, Mark Zuckerberg, revealed that almost 500 million people use their smartphones to check their Facebook accounts on a daily basis, which means there is a huge pool of users who can be targeted by ads on this platform.
The total amount of revenue generated by Facebook over this three month period was roughly 1.18 billion, which is up by 53 per cent annually.
139 million of this total came from the sale of virtual items, including gifts and games, which shows that advertising is still its biggest banker.
The benefit of targeting ads at smartphone users is that they can occupy a much larger proportion of the display and thus increase the chances of engagement and eventual conversion.
Facebook's real value comes from the vast store of personal information that it holds on its users, which of course they freely submit. It can use this to target ads specifically to users, based on their interests and interactions.
Of course, the smaller screens of smartphones does mean that Facebook is limited in the number of ads that it can show, but Zuckerberg's company is ambitious and hopes that mobile dominance will allow it to reach the rest of the world's population.
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