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If you are among the many Facebook users who have noticed more ads in more places — and on more devices — than in the past, your observation would be spot on.
There are indeed more ads, and they are as personalized as can be, thanks to all that information Facebook gathers every time you click “like,” post a bit of news or make a comment on a photo.
All that engagement is paying off big time for the world’s largest social network, which on April 23 blew right past analyst projections in its first quarter 2014 earnings report. Overall, Facebook recorded $2.5 billion in revenue (34 cents per share in profit), easily eclipsing analyst estimates of $2.36 billion in revenue and 24 cents per share in profit.
Facebook’s take-home profit for the quarter was $642 million, which is three times that of the first quarter of 2013.
Mobile Strategy Now Bringing in Business
It took Facebook a few years — from 2011 until now — to get its mobile strategy into gear, but it is demonstrating that it can transition its advertising business effectively to mobile devices.
The Menlo Park, Calif.-based social network’s global influence isn’t leveling off yet. The company reported a gain of about 50 million new monthly active users in the quarter, increasing its total to 1.28 billion. Daily active users now amount to 802 million, up from 757 million in the previous quarter.
Facebook also crossed an important threshold, reporting 1 billion mobile monthly active users for the first time. That will play heavily on setting advertising rates. Mobile advertising now generates nearly 60 percent of Facebook’s total ad revenue.
In a clear understatement, CEO Mark Zuckerberg said in a conference call with analysts and investors that “these results show Facebook’s business is strong and growing.”
On the call, COO Sheryl Sandberg indicated that the company remains confident that it will continue to serve up more — and increasingly relevant — ads on Facebook’s main site and its mobile apps.
Click-Through Rates on Ads Increases
Sandberg pointed to a recent study by Adobe on Facebook ads placed by 100 large social media advertisers, which determined that click-through rates in the first quarter increased a hefty 160 percent year-over-year.
“The ads are getting more relevant, but there’s still a long way to go,” Sandberg said. “We have a great opportunity to build the first platform for personal marketing at scale.”
Facebook saw these revenue levels coming when it invested big chunks of money on two companies earlier this quarter: $19 billion on Feb. 19 for messaging platform WhatsApp and $2 billion on March 25 for virtual reality startup Oculus VR.
Patrick Salyer, CEO of market researcher Gigya, wrote in a media advisory that the social network is “continuing to make progress in its quest to own consumer identity — a notion that is reinforced by Gigya’s recent research, which shows Facebook making a return to dominance as a social login provider.”
Gigya’s research also shows that during the last two quarters, Facebook has seen a 3 percent growth in its share of e-commerce social logins, making it by far the most dominant player, with 77 per cent of all logins, Salyer said.
Growth Shown in Several Sectors
“Facebook’s growth hasn’t just been limited to e-commerce, either, with strong gains in consumer brands, travel and hospitality,” Salyer said.
“Despite Facebook’s continued prominence as the leading identity provider (with 53 percent of total social media logins), it will be intriguing to see if this trend continues, particularly as Google works to seamlessly integrate Google/Google+ identity into native Android devices and as other identity providers gain traction in certain regions and verticals.”